The breaking thread and the sessile drop methods have been used to evaluate the interfacial tension between a polypropylene (PP) and a polyethylene-terephthalate (PET). An excellent correlation was found between the two. The breaking thread technique was then used to evaluate the interfacial tension of these blends at various levels of a styrene-ethylene butylene-styrene grafted with maleic anhydride (SEBS-g-MA) compatibilizer. In order to evaluate the relative roles of coalescence and interfacial tension in controlling dispersed phase size reduction during compatibilization, the morphology of PP/PET 1/99 and 10/90 blends compatibilized by a SEBS-g-MA were studied and compared. The samples were prepared in a Brabender mixer. For the 10/90 blend, the addition of the compatibilizer leads to a typical emulsification curve, and a decrease in dispersed phase size of 3.4 times is observed. For the 1/99 blend, a 1.7 times reduction in particle size is observed. In the latter case, this decrease can only be attributed to the decrease of the interfacial tension. It is evident from these results that the drop in particle size for the 10/90 PP/PET blend after compatibilization is almost equally due to diminished coalescence and interfacial tension reduction. These results were corroborated with the interfacial tension data in the presence of the copolymer. A direct relationship between the drop in dispersed phase size for the 1/99 PP/PET blend and the interfacial tension reduction was found for this predominantly shear mixing device.