Novel blends of PET and ABS were prepared by extrusion and injection molding. DSC and DMTA studies show that PET and ABS are immiscible and that the blends consist of four phases : SAN, grafted polybutadiene, amorphous PET, and minor amounts of crystalline PET. The morphology was investigated by transmission electron microscopy on OsO4-stained and unstained sections and by scanning electron microscopy of alkali- and solvent-etched surfaces. These techniques reveal that the two major domains, SAN and amorphous PET, interpenetrate and are cocontinuous over the compositional range of 30-70 wt % PET. The yield stress and flexural modulus increase in an almost linear fashion as the weight fraction of PET in the blend is increased. In contrast, the notched Izod impact energy passes through a maximum and the Dart impact energy shows a step transition at 50 wt % PET. SEM studies of the Izod fracture surfaces exhibit considerable plastic deformation in both domains when the specimens are tough, indicating that both phases participate in the toughening process.