A commercially available tetrafunctional epoxy monomer was demonstrated to be an effective reactive compatibilizer for blends of poly( ethylene terephthalate) (PET) and polyphenylene ether (PPE). It requires about 10-20% by weight of a conventional reactive compatibilizer to achieve the same level of compatibilization in terms of domain size reduction and mechanical property improvement. This epoxy monomer is able to contact and react with PET and PPE simultaneously during high shear extruder blending to form the desirable PET-epoxy-PPE mixed copolymer. This mixed copolymer contains PET and PPE segments that tend to anchor at the interface to act as an efficient compatibilizer of the PET and PPE blends.