Blends of poly(ethylene terephthalate) (PET)/poly(ethylene-co-ethyl acrylate) were found to have good mechanical properties when melt-mixed at optimum conditions, i.e. at approximately 290-degrees-C for 25 min. Characterization studies based on tensile testing, dynamic mechanical analysis, differential scanning calorimetry and Fourier transform infra-red spectroscopy of blend extracts and morphological evidence using optical and scanning electron microscopy, support the view that an in situ compatibilization of the two components takes place via transesterification reactions. Compositions studied covered the complete range and best mechanical properties were obtained when PET formed the blend matrix.