<p>Biodegradable polymers, particularly aliphatic biopolyesters, are increasingly employed as sustainable alternatives to conventional plastics; however, their practical implementation within circular material schemes critically depends on their ability to withstand repeated thermomechanical processing. Processing-induced degradation, strongly influenced by moisture, therefore represents a key materials science challenge for biodegradable polyesters intended for mechanical recycling. In this study, the mechanical recyclability of a commercial injection-molding-grade PLA/PHB blend was systematically investigated with a specific focus on moisture control as a technological parameter governing degradation pathways and processing stability. Mechanical recycling was evaluated under laboratory-simulated conditions using repeated extrusion with and without material pre-drying, as well as under realistic industrial conditions employing a closed-loop injection molding and regranulation process with controlled moisture management. Changes in molecular characteristics, rheological behavior, thermophysical properties, mechanical performance, and optical properties were monitored over multiple recycling cycles to distinguish between hydrolytic and thermomechanical degradation mechanisms. The results show that residual moisture decisively affects the initial degradation state of biodegradable polyesters during melt processing. Recycling without pre-drying led to pronounced hydrolytic chain scission already in the first processing steps, resulting in a significant reduction of molecular weight, decreased melt viscosity, increased scatter in mechanical properties, and more pronounced color changes. In contrast, pre-drying did not eliminate degradation during subsequent recycling cycles but preserved a higher initial molecular weight and melt viscosity, which were subsequently maintained throughout further processing. Consequently, dried materials exhibited improved processing stability, more consistent mechanical behavior, and enhanced optical stability. Notably, despite higher thermomechanical loading, industrially recycled samples retained stable molecular, rheological, and mechanical properties when effective moisture control was applied. The results indicate that moisture primarily governs the initial stage of degradation through hydrolytic chain scission, while subsequent property evolution is predominantly controlled by thermomechanical degradation processes once the molecular structure stabilizes. These findings demonstrate that biodegradable biopolyester-based materials, exemplified by the investigated PLA/PHB blend, can remain mechanically recyclable across multiple processing cycles. While recycling without drying offers an energetically favorable route for applications tolerant to moderate property variations, moisture control provides a clear technological advantage by stabilizing degradation pathways and widening the processing window. More broadly, this work highlights that biodegradability and mechanical recyclability are not mutually exclusive, and that controlled processing conditions enable biodegradable polyesters to be effectively integrated into circular material strategies.</p>