The modification of ethylene-propylene copolymer (EP) has been accomplished by radical EP-graft-acrylic acid (EP-g-AA) has been used to obtain ternary PA/EP/EP-g-AA blends by melt mixing. Different blend morphologies were observed by scanning electron microscopy; the domain size of the EP-dispersed phase in the polyamide 1010 matrix of compatibilized blends decreased compared with that of uncompatibilized blends. It is found that EP-g-AA used as the third component has a profound effect on the mechanical properties of the resulting blends. This behavior has been attributed to serious chemical interactions taking place between the two components. Thermal analysis shows that some thermal properties of PA in compatibilized PA/EP/EP-g-AA changed because of chemical reactions taken place during the blending process. Wide angle x-ray diffraction measurements also confirmed this result.