Environmental concerns have been motivating research in the field of biodegradable materials, especially those from biological sources. Plant fibres are hydrophilic in nature due to interaction with the hydroxyl group of their components and water molecules which results in poor adhesion of these biopolymers to the reinforcing materials due to low compatibility with the hydrophobic polymer matrices that result in inefficient transfer of stress from the matrix to the reinforcing material. Environment friendly methods such as plasma treatment, treatments using fungi, enzymes and bacteria, can be used for the surface modification of plant fibers. In this context, a series of bio-composites e.g. polyvinyl alcohol (PVA) with lignocellulosic substrate (native and delignified) based biocomposites and PVA along with bacterial cellulose modified substrate based biocomposites were successfully synthesized by introducing maleic anhydride as compatibilizer and glycerol as a plasticizer. The lignocellulosic materials (sugarcane bagasse, wheat straw and rice straw) were treated enzymatically and the best delignified substrate was further modified by depositing Acetbacter xylinum. Blends were compression molded and the resulting bio-composites were removed from their respective casting surfaces under ambient environment and characterized using different analytical and imaging techniques. Dynamic mechanical analysis (DMA) was performed to study the mechanical properties of the composites. The structural changes in the composites were analyzed using Fourier transform infra-red spectroscopy (FT-IR), the morphological properties of the bocomposites were studied using Scanning electron microscopy (SEM) and the water absorption behavior of the biocomposites were also determined. The tensile strength, elongation at break point, and Young’s modulus values of the bio-composites reached very high levels in comparison to the composites prepared with pure PVA and pure native straw that were too fragile to be measured for any of the above mentioned characteristics. Morphological analysis of the newly developed biocomposites surfaces through SEM showed a uniform distribution of the PVA and reinforcing substrate. Also there was a marked improvement in the water absorption content of the biocomposite synthesized from 1:3 ratio of wheat straw and PVA. The development of biocomposites by using lignocellulosic biofibres as reinforcement materials will form the basis for the potential use of these biocomposites in various industries.