Blends of a poly(styrene-co-acrylonitrile) (SAN) with poly(ethene-co-1-octene) rubber (EOR) were investigated. An improved toughness-stiffness balance was obtained when adding as a compatibilizer a blend consisting of oxazoline-functionalized EOR, prepared by grafting EOR with oxazoline-functional maleinate, and paly(styrene-co-maleic anhydride) (SMA), which is miscible with SAN. Enhanced interfacial adhesion was evidenced by the improved dispersion of the EOR in the SAN matrix and the reduced glass transition temperature of the dispersed EOR phase. Morphology studies using transmission electron microscopy revealed formation of an interphase between the matrix and the rubber particles.