This study focused on achieving biodegradable thermoplastic polyurethane (TPU) blends with good mechanical properties by the incorporation of starch. Thermoplastic starch (TPS) was developed by plasticizing corn starch in a twin screw. Polyolefin elastomer (POE) was used as the compatibilizer to improve the flexibility of the TPU/TPS system. The miscibility of the blends was investigated by Fourier transform infrared spectroscopy (FT-IR), scanning electron microscopy (SEM) and differential scanning calorimetry (DSC). Mechanical analysis (impact, tensile, and folding endurance tests), dynamic mechanical analysis (DMA), degradation tests and contact angle (CA) tests were employed to study the mechanical properties and hydrophilic sensitivity of the TPU/TPS blends. The results showed that POE improved the miscibility of the blends by enhancing the interfacial effects of the TPU/TPS blend, decreasing the interfacial tension between TPS and TPU, as well as increasing the inter-hydrogen bonds between TPU and TPS. The hydrophilic qualities of the TPU blends, such as water adsorption and CA, increased with increasing TPS content, resulting in improved biodegradation ability. TPU/TPS (20 wt%)/POE (10 wt%) endowed the blends with good folding endurance (>30.0 × 10³), notched impact strength (no break), elongation at break (>800%) and a 6.2% biodegradation rate after 7 weeks. The improved properties of TPU/TPS showed that these blends have high potential for use in environmentally friendly materials.