Compatibilization of a polypropylene (PP)/polybutylacrylate (PBuA) blend was studied, with the aim of achieving better adhesion at the interphase through modification of both the PP and PBuA phases. The compatibilization involved two separate stages : First, a small amount (2 and 5 mol %) of functional monomer copolymerizable with and soluble in BuA was added to the BuA initiator solution. Then, this solution was impregnated into PP pellets and polymerized inside the pellets by free-radical polymerization in a water suspension. The resulting blend was a thermoplastic elastomer consisting of PP as the matrix and functionalized PBuA as the partly crosslinked dispersed rubbery phase. The functionalities of the monomers were epoxy, oxazoline, hydroxyl, secondary amine, and carboxyl. In the second stage, two commercial graft, copolymers of PP (PP grafted with either acrylic acid or maleic acid anhydride) were blended at the melt stage with the PP/functionalized PBuA blend. Here, the compatibilizing reactions took place between the functionalized components of the blend. The compatilization reactions were detected by FTIR analysis and by changes in mechanical or thermomechanical behavior of the blends. Morphology studies were carried out. As a result, the tensile strength, tensile modulus, elongation at break, and tear strength of the final product were improved by about 15, 20, 160, and 50%, respectively, compared with the unfunctionalized blend. The hardness of the material remained unchanged in the compatibilization.