Compatibilization of blends based on poly(phenylene ether) (PPE) and polyamide(PA) has been practiced with the incorporation of a copolymer formed by grafting polystyrene onto polybutadiene latex(g-BS) which is further functionalized with maleic anhydride(MAH) (g-BS *) to impart reactivity with amine groups of PA. The major focus has been placed on the effect of the various structural factors in g-BS * on the phase morphology and mechanical performance of the blends. For the balance of impact strength and heat resistance, it was important to locate g-BS particles inside of the PPE phase, which was accomplished by the proper control of the molecular weight and amount of PS in g-BS *. For g-BS * 's having constant molecular weight and amount of PS, the reduction of MAH content or increase of rubber particle size in g-BS * resulted in the increase of domain size and consequently loss in mechanical properties. Based on the comparison made with the conventional PPE/PA blend comprising MAH grafted PPE as a compatibilizer, it was confirmed that the comparable level of mechnical performance can be achieved by an appropriate g-BS * type material with improved whiteness index.