A water-based one-pot synthesis strategy for converting cellulose nanofibrils (CNF) into a hydrophobic and processable biopolymer grade is devised. CNF was chemically modified through admicellar polymerization, producing fibrils coated with fatty acrylate polymers. The proposed modification targets a change in the interfibrillar interactions and improved CNF compatibility with a degradable plastic composite matrix, poly(butylene adipate-co-terephthalate), PBAT in composites prepared by melt extrusion. CNF had a clear reinforcing effect on PBAT, increasing Young's modulus by at least 35% and 169% at 5 and 20% (w/w) CNF content, respectively. However, unmodified CNF showed aggregation, poor adhesion in the matrix, and severely impaired the ductility of PBAT. CNF modified by admicellar polymerization was homogeneously dispersed in the PBT matrix and showed significantly better preservation of the elongation properties compared to unmodified CNF, especially at 5% (w/w) addition level.