The use of starch as bioplastic has been widely studied; however, the quality needs to be improved before it can substitute the commercial plastic. Sago is one of starch sources that can be used for this purpose and is available in considerable amounts in Indonesia. Previous research to synthesize a modified sago starch thermoplastics (TPS) in-situ by reacting plasticized starch with diphenylmethane diisocyanate (MDI) and castor oil; simultaneously to produce polyurethane prepolymer (PUP) in more homogeneous phase and smaller size has been successfully done. At this phase, chitosan of 0.5, 1, 1.5, 2 and 2.5 gram was added into the compound and acted as filler to improve the mechanical and thermal properties of TPS. The chitosan was first diluted into acetate acid and mixed rigorously with the starch and PUP. Sorbitol was added as plasticizer. The modified TPS-chitosan was then characterized mechanically, thermally, and biodegradability. The results of this study showed that the optimum mechanical properties of modified TPS were obtained with an addition of 1 gram chitosan; tensile strength and elongation were 200.04 MPa and 24.96 % respectively. Thermal Gravimetric Analysis showed that modified TPS-chitosan had a good thermal stability and could only be degraded at high temperature of 534°C. DSC result showed that modified TPS-chitosan had a high melting point of 385.41°C and ΔH152.61 J/g. This value is higher than melting point of TPS alone which is 104.69°C. Modified TPS-chitosan was degraded earlier than TPS which was 19 days in nature compared to 2-4 months. Overall, mechanical and thermal properties of modified TPS are improved with the addition of chitosan.