In this paper, unepoxidized ethylene propylene diene rubber (uEPDM) was first epoxidized with formic acid and H2O2, and then the epoxidized ethylene propylene diene rubber (eEPDM) was melt-mixed with PET resin in a Brabender-like apparatus. Toughening of PET matrix was achieved by this method. The dispersion of rubber particles and phase structure of the blends were also observed by SEM. It has been suggested that the epoxy groups in the eEPDM could react with PET end groups to form a graft copolymer which could act as an interfacial compatibilizer between the PBT matrix and eEPDM rubber dispersed phase. This is beneficial to the improvement of the impact performance of PBT.