A biodegradable fiber that is formed from a thermoplastic composition that contains polylactic acid, a plasticizer, and a compatibilizer is provided. The compatibilizer includes a polymer that is modified with a polar compound that is compatible with the plasticizer and a non-polar component provided by the polymer backbone that is compatible with polylactic acid. Such functionalized polymers may thus stabilize each of the polymer phases and reduce plasticizer migration. By reducing the plasticizer migration, the composition may remain ductile and soft. Further, addition of the functionalized polymer may also promote improved bonding and initiate crystallization faster than conventional polylactic acid fibers. The polar compound includes an organic acid, an anhydride of an organic acid, an amide of an organic acid, or a combination thereof. Such compounds are believed to be more compatible with the generally acidic nature of the polylactic acid fibers.