Processing of virgin and recycled poly(ethylene terephthalate) (PET) in a twin screw extruder evidences the degradative effect caused by thermal decomposition of poly(vinyl chloride) (PVC) and other impurities, e.g. adhesives, at the processing temperature. Lower melt viscosity and molecular weight, along with higher carboxylic end group concentration, were observed for recycled PET, the extent depending on PET purity. In an attempt to investigate the correlation between the kinetics of degradation phenomena and the level of thermomechanical stress, a novel dynamic method of evaluating thermal stability in processing conditions was developed. Such a method allows the achievement of long equivalent residence times while using lab-scale extruders. As a result of these experiments, PVC-rich recycled PET was shown to reach very low melt viscosity after less than 10 min in processing conditions, while virgin PET retained high viscosity even after 30 min.