A modified method of dynamic vulcanization was proposed to prepare ground tire rubber/high-density polyethylene (GTR/HDPE) blends. The procedure combined the surface devulcanization of GTR (d-GTR) with tetraethylenepentamine and in-situ grafting of HDPE with the grafting monomers of styrene and glycidyl methacrylate. The mechanisms of the mechano-chemical devulcanization of GTR, and the grafting and cross-linking reactions between d-GTR and HDPE were revealed. The influence of initiator and grafting monomers on the mechanical properties, crystallization behavior and rheological behavior of the blends were investigated in detail. Furthermore, the dynamic mechanical properties and morphology of d-GTR/HDPE blend and unmodified GTR/HDPE blend were compared. Results indicated that the compatibility and mechanical properties of d-GTR/HDPE blend were obviously improved by the modified method and they could be tailored by adjusting initiator/grafting monomers ratio. Moreover, the d-GTR/HDPE blends possessed a stable processing and reprocessing ability.