A commercially available tetra-functional epoxy monomer has demonstrated to be a highly efficient reactive compatibilizer in compatibilizing the immiscible and incompatible polymer blends of poly(ethylene terephthalate) (PET) and liquid crystalline polymer (LCP). This multi-functional epoxy monomer is able to react with both base polymers simultaneously as a coupling agent to form the desirable epoxy-co-PET-co-LCP mixed copolymer. This mixed copolymer possessing segments of PET and LCP tends to reside at the interface to reduce the interfacial tension in the melt and the size of the resultant phase domains. Additionally, the presence of this epoxy compatibilizer enhances the formation of greater numbers and finer dimension of the in situ-formed LCP fibrils. It requires only a very small amount of the epoxy monomer, a few fractions of one percent, to improve drastically the mechanical properties of the PET/LCP blends. The compatibilization mechanism by this multi-functional epoxy monomer acting as a coupling agent has been discussed in detail.