Abstract This study focused on the preparation of bamboo flour/Poly (butylene adipate‐co‐terephthalate) (PBAT) composites with high bamboo flour content and high mechanical strength using polyurethane prepolymer as chemical–physical compatibilizer via in‐situ reaction. Additionally, this work explored the effects of different bamboo flour contents and different types of polyurethane prepolymers on the mechanical properties, morphology, thermodynamics, water absorption, and surface wettability of the bamboo flour/PBAT composites. The results showed that PBA‐based polyurethane prepolymer (PBAPU) was an effective compatibilizer, promoting the interfacial adhesion between bamboo flour and PBAT. The strength at break, elongation at break, and impact strength of composites with 50% bamboo flour content reached 19.56 MPa, 25.53%, and 12.8 KJ/m 2 . With the increase of bamboo flour content, the strength of composites was still higher. The addition of PBAPU enhanced the thermal stability, mechanical properties, water resistance, and hydroscopicity of the bamboo flour/PBAT composites. Furthermore, the compatibilization of PBA‐based polyurethane prepolymer on composites was better than that of PCL‐based polyurethane prepolymer. Overall, we provided an effective strategy for preparing renewable, green, and practical high‐bamboo flour composites. Highlights This work successfully prepared bamboo flour/PBAT composites with high bamboo content using an in‐situ melt blending reaction. A new interface structure of physical PBA‐PBA interaction between the PBAPU layer and PBAT matrix improved the compatibilization of the composites. PBAPU as a compatibilizer effectively improved the interface compatibility, thermal stability, and water resistance of Bamboo flour/PBAT blends. Bamboo flour/PBAT composites with high bamboo flour content have excellent mechanical properties.