Enhancement of heat deflection temperature (HDT) and impact strength has been investigated due to the various processing conditions of reaction extrusion. Three processing methods employed were ; the simple mixing of ABS and PPO : the simultaneous mixing of ABS, PPO, compatibilizer and and maleic anhydride (called A-series) : the step-wise mixing of the mixtures of ABS, compatibilizer and the MA-modified PPO (called B-series). The ABS materials which were comprised from acrylonitrile, styrene and butadiene rubber, were divided into four different sorts according to the contents of each component named as ABS-1, ABS-2, ABS-3 and ABS-4. The ABS-3B/PPO blend prepared by the stepwise mixing showed the highest impact strength. The proposed reaction mechanism was existence of the compatibility between ABS and the compatibilizer, and the reactivity between the MA-modified PPO and the compatibilizer. The highest impact strength (47 kgㆍcm/cm) and HDT(110 ℃) were obtained in ABS-3B/PPO at 50/50 in the presence of 10 wt% compatibilizer(2) an 1 wt% MA, and 60/40 was the next. The agglomerated rubber shape in ABS-3 was believed to enhance the reactivity between the compatibilized ABS and the MA-modified PPO.