In attempts to produce modified polyethylene terephthalate (PET) resins with improved rheology for applications requiring high viscosity and elasticity (e.g., low density extrusion foaming, extrusion blow molding), a novel diimidodiepoxide of low molecular weight was evaluated as chain extender/branching agent. Its reactivity was compared with that of an ethylene/glycidyl methacrylate copolymer. The diepoxide showed higher reactivity than the copolymer and could be used at much lower concentrations. The complex chain extension/degradation reactions occurring In the melt were followed in a batch mixer by torque changes, and by analyzing the products for residual carboxyl and hydroxyl content, intrinsic viscosity, insoluble content and melt viscoelastic properties. The preliminary results of this work indicated an overall decrease in carboxyl content, increase in hydroxyl content, increase in intrinsic viscosity and melt viscosity and storage modulus values depending on mixing time and the type and concentration of the additive. It is shown that under certain conditions, reaction of PET with less than 1 wt% diimidodiepoxide may produce materials with rheological characteristics similar to those of PET grades that are extrusion foamable by gas injection to low densities.