The micromechanical behavior of poly(ethylene terephthalate), PET, modified with a metallocene polyolefin copolymer (mPE) was investigated. Uniaxial deformation tests were performed using a tensile stage in a scanning electron microscope. This technique allowed the identification of the main deformation mechanisms that are associated with energy dissipation and toughness improvement. The poly(ethylene terephthalate) was blended with 5 wt% mPE by single-screw extrusion. Films with thicknesses ranging from 200 to 500 mum were produced. Observation of the surfaces of the films during uniaxial deformation revealed the sequence of events leading to the full yielding of the matrix. In the early stages of deformation, the particles deform together with the matrix. As the deformation is increased, cavitation inside the particles occurs and fibrillation at the particle/matrix interface is observed, as well as the onset of shear banding. In order to study the effect of interfacial adhesion of the deformation mechanisms, the PET/mPE blends were compatibilized by grafting with glycidyl methacrylate (GMA). The reduction of the particle size was significant, which is indicative of the efficiency of GMA grafting in this type of blend. In this case, the particles were difficult to detect on the surface. Cavitation and shear banding occurred simultaneously. A similar behavior was observed in the case of oriented blends.