The preparation of supertoughening poly(ethylene terephthalate) (PET) blends has always been a practical and valuable task. In our work, PET resins grafted with poly(acrylic acid) (PAA), termed as PET-g-PAA, were first prepared through gamma-ray radiation induced graft polymerization and blended in a partially miscible PET/ethylene-methyl acrylate-glycidyl methacrylate random terpolymer (ST2000) system as the compatibilizer. The impact strength of the PET blends achieves the maximum at a 6 wt % of PET-g-PAA, but without the loss of tensile strength. Furthermore, much less of ST2000 is needed for the blends to possess high impact strength at the existence of PET-g-PAA. The SEM morphological analysis of the impact-fracture surface implies a good interfacial adhesion between ST2000 and PET matrix, which should be ascribed to the effective compatibilization by the in situ formed PET-g-PAA/ST2000 graft copolymer through the reaction between the -COOH groups and epoxy groups on ST2000.