Toughened blends of poly(butylene terephthalate) (PBT) with appropriate ABS materials can be prepared without a compatibilizer within limited melt processing situations. As illustrated by transmission electron microscopy, coarsening of uncompatibilized blends occurs under certain molding conditions resulting in a deleterious effect on blend properties. Methyl methacrylate, glycidyl methacrylate (GMA), ethyl acrylate (MGE) terpolymers were shown to be effective reactive compatibilizers for PBT/ABS blends that broaden the processing window and provide improved low temperature impact properties, ABS dispersion, and morphological stability. A twin screw extruder is more effective than the single screw extruder used here for processing these reactive blends. Several ABS types with different rubber contents were examined; generally, materials with very high rubber contents were found to be more beneficial for toughening PBT. Among these high rubber content materials, the ABS material having the lowest melt viscosity was found to be superior for optimizing morphology and impact properties. At leat 30% of this material, containing a minimum of 36% rubber, is required for producing toughened blends. Moderate amounts of GMA functionality in the compatibilizer (>5%) and small amounts of compatibilizer in the blend (<5%) significantly improve low temperature impact properties and ABS dispersion. Higher amounts of GMA in the blend increase the room temperature impact strength with little effect on the ductile-brittle transition temperature and increase blend viscosity.