Poly(3-hydroxybutyrate) (PHB) is a biodegradable polyester produced directly through biological processes by bacteria. Production of pure PHB requires extraction of PHB from bacterial cells and subsequent purification, both of which have substantial environmental impacts. Direct processing of PHB-laden cells as a component in a polymer composite is a solution to this issue. This research developed a wood plastic composite (WPC) comprising PHB, bacterial cell debris (cell mass), and wood fiber using an extrusion-injection molding two-step process and a direct extrusion process. Processing condition study showed that the ternary composite could be produced using common plastic processing methods. Mechanical and water resistance tests demonstrated that optimized formulations of the composite possessed properties comparable to or even better than those of a commercial WPC. The contribution of the cell mass to composite properties was identified and its mechanisms were determined. Interfacial bonding between the wood fiber and PHB was found to be important to mechanical properties and water resistance of the composite and it could be effectively improved by a coupling agent. This research demonstrated technical and economic viability of industrial production of the PHB based WPC by directly extruding PHB-laden bacterial cells with wood fibers.