Ternary compatible blends of chitosan, poly(vinyl alcohol), and poly(lactic acid) were prepared by an oil-in-water (O/W) emulsion process. Solutions of chitosan in aqueous acetic acid, poly(vinyl alcohol) (PVA) in water, and poly(lactic acid) (PLA) in chloroform were blended with a high-shear mixer. PVA was used as an emulsifier to stabilize the emulsion and to reduce the interfacial tension between the solid polymers in the blends produced. It proved to work very well because the emulsions were stable for periods of days or weeks and compatible blends were obtained when PVA was added. This effect was attributed to a synergistic effect of PVA and chitosan because the binary blends PVA/PLA and chitosan/PLA were completely incompatible. The blends were characterized by scanning electron microscopy (SEM), differential scanning calorimetry (DSC), thermal mechanical analysis (TMA), stress-strain tests, and Fourier transform infrared spectroscopy (FTIR). The results indicated that despite the fact that the system contained distinct phases some degree of molecular miscibility occurred when the three components were present in the blend.