Biocompatible and biodegradable polylactide (PLA) composites with supertough mechanical property and sufficient flame retardancy were fabricated by employing a facile approach involving reactive blending of PLA and ethylene-acrylic ester-glycidyl methacrylate terpolymer (EGMA), with the addition of aluminum hypophosphite (AHP) as an effective flame retardant. In consideration of the balance between mechanical property and flame retardancy, the optimal formula was taking a PLA/EGMA 80/20 blend (supertough STPLA) as the matrix and adding 20 wt % of AHP (relative to the mass of STPLA) as the flame retardant, coded as STPLA/20AHP. The mechanical property test showed that for STPLA/20AHP the elongation at break was increased by about 22 times and the notched Izod impact strength was enhanced by approximately 11 times as compared to those for neat PLA. The flame-retardant property test showed that for STPLA/20AHP the limiting oxygen index value reached 26.6% and the UL-94 V0 rating test was passed. Thermogravimetric analysis, microscale combustion calorimetry, and cone calorimeter were further applied to reveal the thermal stability and combustion behaviors of STPLA/xAHP, respectively, where x indicated the mass content of AHP in percentage. The phase separation morphology, dispersion of AHP particles in STPLA matrix, and fracture surfaces and char residues after flame burning were examined by phase contrast optical microscopy and scanning electron microscopy, respectively, which helped comprehend the results obtained from the mechanical property and flame retardancy tests. The supertough STPLA/xAHP, with sufficient flame retardancy as prepared in this work, could have a potential for engineering applications.