Flame retarded poly(butylene terephthalate) (PBT) is required for electronic applications and is mostly achieved by low molar mass additives so far. Three phosphorus-containing polyesters are suggested as halogen-free and polymeric flame retardants for PBT. Flame retardancy was achieved according to cone calorimeter experiments showing that the peak heat release rate and total heat evolved were reduced because of flame inhibition and condensed-phase activity. The presented polymers containing derivatives of 9,10-dihydro-9-oxa-10-phosphaphenanthrene-10-oxide form immiscible blend systems with PBT. Shear-rheology shows an increase in storage moduli at low frequencies. This is proposed as quantitative measure for the degree of phase interaction. The phase structure of the blends depends on the chemical structure of the phosphorus polyester and was quite different, depending also on the viscosity ratio between matrix and second phase. A lower viscosity ratio leads to two types of phases with spherical and additionally continuous droplets. Addition of the flame retardants showed no influence on the dielectric properties but on the mechanical behavior. The polymeric flame retardants significantly diminish the impact strength because of several reasons: (1) high brittleness of the phosphorus polyesters themselves, (2) thermodynamic immiscibility, and (3) weak phase adhesion. By adding a copolymer consisting of the two base polymers to the blend, an improvement of impact strength was obtained. The copolymer particularly acts as compatibilizer between the phases and therefore leads to a smaller phase size and to a stronger phase adhesion due to the formation of fibrils. (c) 2012 Wiley Periodicals, Inc. J. Appl. Polym. Sci., 2013