This paper presents a green and sustainable route for mechanical recycling of poly(lactic acid) (PLA)/cellulose nanocrystal (CNC) based films multiple times, which results in enhanced thermal, rheological, and structural properties along with improved processability. Recycling of reactively extruded PLA/CNC films in the presence of dicumyl peroxide (DCP) was carried out with sulfuric and hydrochloric acid hydrolyzed CNCs (CNC-S and CNC-Cl). This shows improved thermal stability (improved by 12 °C), consistent Mw characteristics (180-150 kDa), and enhanced melt strength as evident from the thermal degradation studies and viscoelastic properties measured from rheological studies. The improved recyclability of PLA/CNC films was evident from enhanced complex viscosity and storage modulus of melt by ∼4 and 10 times along with increased mechanical strength of ∼16-30% even after the third recycling. Therefore, the present study provides a novel route to recycle PLA-based CNC films after their service life into value-added biodegradable products with adequate properties competitive enough to replace petroleum-based conventional plastics for commodity applications.