The mixing of incompatible polymers such as polyethylene terephthalate (PET) and styrene-butadiene rubber (SBR) produces a blend with poor mechanical and impact properties, because polymeric phases interact weakly with each other and segregate. The use of SBR grafted with maleic anhydride (MAH) increases the compatibility of the SBR-PET system by generating higher interactions and chemical links between the ingredients of the blend. The induced compatibility is reflected in the 2.5-fold increase in the impact resistance of the blend as compared to that of pure PET. The grafting reaction to produce SBR-g-MAH is carried out by reactive extrusion using a reaction initiator benzoyl peroxide (BPO), and the extent of the reaction depends on the concentration of MAH and BPO. Results indicate the close relationship between processing conditions and microstructural parameters, such as particle diameter and interparticle distances of the dispersed rubber phase, necessary to achieve the optimum impact resistance.