Binary blends of a reactive ethylene-based terpolymer with polybutylene terephthalate (PET) and with a liquid crystalline polyester (LCP) were studied to clarify the possible interactions between the blended polymers. The aim was to determine the suitability of the reactive terpolymer containing epoxy reactivity as a compatibilizer in blends of polypropylene (PP) and these two polyesters. The binary blends exhibited increased viscosity during blending, changes in the crystallization of the PET phase, and an intimate contact between the blended polymers, which pointed to strong interactions or chemical reactions between the compatibilizer and both PET and LCP. FTIR analysis confirmed the reaction of the epoxide and formation of new esters. Most probably the carboxyl end groups of the polyesters reacted with the epoxy group of the compatibilizer. In the second part of the work the same terpolymer was shown to act as a compatibilizer in PP/PBT and PP/LCP blends. This behavior was based on good mixing with the PP phase and on the chemical reactivity or strong interactions with the polyesters demonstrated in the investigations on binary blends. Addition of 5 wt % of the compatibilizer improved the impact strength, especially in PP/PBT blends where synergistic behavior was found at compositions of 80/20 and 20/80. In PP/LCP blends, the compatibilizer significantly improved the impact strength of unnotched samples at 20 wt % LCP content. In both blends, the compatibilizer reduced the size of the dispersed domains and caused them to attach better in the matrix.