<p>The development of sustainable heat-shrinkable films is critical for advancing ecofriendly packaging materials. This study investigates the shrinkage, thermal, barrier, and mechanical properties of blown films composed of poly(butylene adipate-co-terephthalate) (PBAT) and poly(propylene carbonate) (PPC). PBAT/PPC blends containing 10–40 wt% PPC were prepared using twin-screw extrusion, followed by blown film extrusion. The optical transparency of the PBAT/PPC films decreased with increasing PPC concentration, indicating a phase incompatibility between PBAT and PPC. The shrinkage in the machine direction increased with increasing PPC content, although films with 40 wt% PPC exhibited lower shrinkage than those with 30 wt% PPC. SEM analysis revealed greater shrinkage in both the machine and traverse directions with higher PPC content, and indicated poor compatibility between PBAT and PPC prior to shrinkage. DSC analysis revealed reduced crystallinity with increasing PPC content, leading to enhanced amorphous characteristics. TGA indicated lower thermal stability with higher PPC content, which correlated with the observed differences in shrinkage behavior. Furthermore, permeability results confirmed improved barrier properties with increasing PPC content. PBAT/PPC films with up to 20 wt% PPC exhibited tensile strength and elongation comparable to or exceeding those of linear low density polyethylene. However, when the PPC content exceeded 30 wt%, the mechanical properties deteriorated. This research provides insights into the feasibility of PBAT/PPC blends for sustainable packaging applications based on their mechanical, barrier, and shrinkage performance.</p>