A new method to obtain hydroxylated poly(vinyl chloride) (PVC-OH) and its crosslinking in the melt are studied. Starting from a vinyl chloride-cc-vinyl acetate copolymer, a transesterification reaction in the presence of an alcohol during the processing of plasticized polymer is investigated as a function of the processing temperature and alcohol nature (l-butanol or l-octanol). Reaction evolution is followed by H-1-NMR and IR spectroscopies. The best results are obtained for l-octanol, and they show the absence of secondary reactions and the progressive appearance of OH groups in the polymer as acetate groups disappear. On the other hand, crosslinking of the thus-obtained PVC-OH with hexamethylene diisocyanate (HMDI) during the processing is also studied. The gel content and the mechanical properties at 140 degrees C are studied as a function of three crosslinking variables: number of OH groups present in the polymer, concentration of HMDI added to the polymer, and time of crosslinking. The results show that by optimizing those parameters it is possible to obtain gel contents up to 100% and an increase of 600% in the Young's modulus and 1300% in the ultimate tensile strength with respect to the plasticized PVC.