Biodegradable poly(3-hydroxybutyrate--3-hydroxyvalerate) (PHBV)/poly(butylene adipate--terephthalate) (PBAT) blends hold great potential for use in sustainable packaging applications for their advanced performance. Understanding the structure-property relationship in the blends at various proportions is significantly important for their future application, which is addressed in this work. The study found that the inherent brittleness of PHBV can only be modified with the addition of 50 wt % PBAT, where co-continuous structures formed in the blend as revealed by scanning electron microscopy (SEM) analysis. The elongation at break (%) of the blends increased from 3.81 (30% PBAT) to 138.5% (50% PBAT) and 345.3% (70 wt % PBAT), respectively. The fibrous structures of the PBAT formed during breaking are beneficial for energy dissipation, which greatly increased the toughness of the blends. Both the SEM observation and glass-transition temperature study by dynamic mechanical analysis indicated that the PHBV and PBAT are naturally immiscible. However, by simply mixing the two polymers with different composition ratios, the properties including melt flow index, heat deflection temperature, and mechanical properties can be tailored for different processing methods and applications. Our research work herein illustrates the fundamental structure-property relationship in this popular blend of PHBV/PBAT, aiming to guide the future modification direction in improving their properties and realizing their commercial applications in different scenarios.