Due to the limited toughening effect of BPM520 (a commercial acrylic-based core-shell structure impact modifier) on poly(butylene terephthalate) (PBT)/polycarbonate (PC) blends, magnesium oxide (MgO) was used as a transesterification catalyst, and BPM520 as a toughening agent to prepare PBT/PC blends by extrusion and injection molding. The structures and comprehensive properties of PBT/PC blends were investigated. Results of thermogravimetric analysis, Fourier transform infrared analysis, differential scanning calorimetry, and rheological measurements showed that transesterification reactions occurred among PBT, PC, and BPM520. As a result, the impact property of the blends was improved significantly, and only 5 wt % of BPM520 was needed to make the PBT/PC blend possess excellent toughness in the presence of MgO, which suggested a very efficient toughening approach for PBT/PC blends.