The aim of this work was to study the compatibilizing effect of the triblock copolymer poly(styrene-bethylene-co-butylene-b-styrene) (SEBS) on the morphology and mechanical properties of virgin and recycled polypropylene/high-impact polystyrene (PP/HIPS) blends. The components of the blend were obtained from municipal plastics waste (MPW), with the PP obtained from blue mineral water bottles, symbolized as PPb, and the HIPS from disposable cups. These materials were preground, washed only with water, dried with hot air, and ground again (Pp(b)) or agglutinated (HIPS). Blends of PPb and HIPS in three weight ratios (6:1, 6:2, and 6:3) were prepared, and three concentrations of SEBS (5.0, 6.0, and 6.7% w/w) were used for investigations of its compatibilizing effect. Scanning electron microscopy (SEM) showed that SEBS reduced the diameter of HIPS dispersed particles that were globular and fibril shaped, along with improving the adhesion between the dispersed phase and the matrix. On the other hand, SEBS interactions with PPb and HIPS influenced the mechanical properties of the compatibilized PPb/HIPS/SEBS blends. The optimal concentration of SEBS was 5 wt % for application to composite films with similar characteristics to synthetic paper.