The poly(2,6-dimethyl-1,4-phenylene oxide) (PPO) was toughened by melt extrusion through its blending with a styrene-b-ethylene/butadiene-b-styrene triblock copolymer (SEBS), or with maleic anhydride (MA) grafted SEBS (SEBS-g-MA). Their morphology, mechanical properties, and rheology have been investigated. Transmission electron microscopy revealed that both kinds of blends had an island-sea structure at low concentrations of SEBS or SEBS-g-MA and a bicontinuous one at sufficiently high concentrations. However, the percolation threshold was higher for SEBS than for the SEBS-g-MA. The Izod impact strength of PPO could be significantly improved through its blending with SEBS-g-MA, particularly in a blend with 20 wt% of SEBS-g-MA at which it had a maximum value. The rheological experiments indicated that the incorporation of SEBS increased and that of SEBS-g-MA decreased the melt viscosity of the system.