Novel blends made of ionic naphthalene thermotropic polymer (NTP) and poly(ethylene terephthalate) (PET) have been prepared by melt mixing. Homogeneous blends were formed when a small amount (5 wt%) of ionic NTP was blended with PET; but, phase separation occurred at a higher composition of the ionic NTP (10 wt%). Both the stiffness and the strength are enhanced in all the blends studied as compared with PET. A remarkable increase in ductility and toughness is noted during necking in these blends. Enhancement in tensile properties and good homogeneity of the blends at low composition (5 wt%) are attributed to ion-dipole interactions between the ionic groups of the ionic NTP and the dipolar units of the PET. It is suggested that ionic NTP chains not only act as reinforcer in the homogeneous blends, but also serve as a nucleating agent to increase crystallinity and as a good stress transfer agent to ease an inhomogeneous deformation process during necking of the PET matrix under tensile stress. (c) 2006 Elsevier Ltd. All rights reserved.