Polyethylene (PE)/poly(butylene terephthalate) (PBT) blends were in situ compatibilized during a processing operation by the addition of a partially hydroxylated ethylene vinyl acetate copolymer (EVAh). This copolymer, obtained from ethylene vinyl acetate (EVA), was as compatible with PE as EVA was before modification. In the presence of EVAh, the dispersion of PBT in the PE matrix was finer, and the interfacial adhesion was improved. These results are relevant for the compatibilization of PE/PBT blends. Moreover, such blends present good toluene barrier properties.