Starch is a promising candidate for preparing biodegradable films with useful gas barriers and thermoplastic capabilities. However, these materials are hydrophilic and brittle, thus limiting their application range. To overcome these drawbacks, it has been hypothesized that starch can be hydrophobized and plasticized during the starch-based film production using a single-step approach and following transesterification principles. In this work, KOH powder and spent frying oil (SFO) were used as an alkaline catalyst and a source for triacylglycerides, respectively, to promote the modification of starch. Different ratios of SFO (w/w related to the dried starch weight) were tested. When compared to the neat films (without a catalyst and SFO), the incorporation of at least 15% SFO/KOH gave rise to transparent, hydrophobic (water contact angles of ca. 90∘), stretchable (ca. 20×), elastic (ca. 5×), and water tolerant starch-based films, contrary to the films produced without the catalyst. ATR-FTIR and 1H NMR revealed structural differences among the produced films, suggesting that starch was modified with the SFO-derived fatty acids. Therefore, adding KOH during the potato starch/spent frying oil-based film’s production was determined to be a promising in situ strategy to develop starch-based materials with improved hydrophobicity and flexibility, while valorizing the potato chip industry’s byproducts.