Thermoplastic "all-cellulose" composites were synthesized by covalent functionalization of cellulose acetate (CA) with oxidized carbonized cellulose (OCC). The OCC were manufactured via microwave-assisted hydrothermal carbonization (HTC) of cellulose followed by oxidation and dialysis. The OCC were of micrometer-size, had plane morphology and contained a variety of oxygen functionalities, enabling transformation into acyl chlorinated OCC under moderate reaction conditions. The synthesis of OCC-modified CA composites and neat CA were performed in the recyclable ionic liquid 1-allyl-3-methylimidazolium chloride. The degree of acetylation and amount of OCC were varied to establish their influence on thermal and physical properties of the composites. The OCC-modified CA composites displayed a notably enhanced film-forming ability, which led to improved optical and mechanical properties compared to neat CA. In addition, it was shown that OCC-modified CA composites can be synthesized from waste products, such as paper tissues. The OCC-modification was demonstrated to be a promising route to transparent and strong thermoplastic "all-cellulose" composites with moderate flexibility.