This paper concerns the in situ compatibilization of immiscible polypropylene/poly(butylene terephthalate) (PP/PBT) blends by a one-step reactive extrusion process. By one-step reactive extrusion, we are referring to functionalization of the PP with a monomer bearing a desired functional group and the subsequent interfacial reaction of this functionalized PP with the PET, where the whole operation is carried out in a single extrusion process. Three monomers, acrylic acid (AA), maleic anhydride (MA) and glycidyl methacrylate (GMA), which are potentially reactive towards the carboxylic and/or hydroxyl groups at the chain ends of the PET, were melt grafted on to the PP by free-radical reactions. A comparative study showed that GMA is more effective in compatibilizing the PP/PBT blends. Optimization of chemical parameters (initial concentrations of GMA and peroxide) and processing conditions (the sequence of addition of the materials, devolatilization of residual GMA, etc.) allowed us to obtain compatibilized PP/PBT blends with a fifteen- to twentyfold improvement in elongation at break and impact strength over an uncompatibilized PP/PBT blend. The in situ compatibilization performance of this one-step reactive extrusion process was comparable with that of a classical two-step process. In this latter case, the first extrusion step was to functionalize the PP with GMA, and the second one being the interfacial reaction between the functionalized PP and the PET.