In this study, New Zealand flax (harakeke) fibre was initially modified through digestion in an alkali solution followed by bleaching with hydrogen peroxide and sodium silicate with the aim of improving thermal and mechanical performance of its composites, through increased interfacial bonding. X-ray diffraction analysis (XRD), Fourier transform infrared spectroscopy and lignin analysis showed that the combination of bleaching and alkali treatment resulted in a higher cellulose content than digestion alone. Fibre inclusion was found to increase the crystallinity of PLA, likely due to heterogeneous nucleation on the treated fibres, which in turn helped to improve the composite strength. The highest tensile strength, tensile modulus and thermal stability were achieved with the bleached fibre which is believed to be due to better fibre distribution and stronger interfacial interaction. This was supported by the adhesion factor and effectiveness coefficient calculated using the data obtained from dynamic mechanical analysis.