In this paper, ethylene-propylene-diene-rubber (EPDM) was epoxidized with an in situ formed performic acid to prepare epoxided EPDM(eEPDM). The eEPDM were used to compatibilize poly(butylenes terephthalate)(PBT) and polypropylene(PP) blends in a haake mixer. FTIR results showed that the EPDM had been epoxidized. FTIR and torque test showed the epoxy functional groups in the eEPDM can react with the carboxylic acid or hydroxyl terminal groups in PBT at the interface to form PBT-g-EPDM copolymers. SEM observation showed that these in situ formed grafted copolymers tent to concentrate along the interface to reduce the interfacial tension at the melt and suppress coalescence by steric hindrance. higher quantity of eEPDM compatibilizer in the blend results in a better compatibilized blend in terms of finer phase domains. Notched Izod impact tests showed that both the adding of rubber and the formation of PBT-g-EPDM copolymer improved the toughness of PBT/PP blends.