The interfacial reaction of the polyethylene (PE)/starch blend system containing the reactive compatibilizer maleated polyethylene (m-PE) was directly characterized by Fourier transform infrared (FTIR) spectroscopy. A significant amount of anhydride groups on m-PE existed as hydrolyzed forms, resulting in a large amount of carboxyl groups. Using a vacuum-heating-cell designed in the laboratory, the carboxyl groups were successfully transformed into the dehydrolyzed state (i.e., anhydride group). This result enabled the direct spectroscopic observation of chemical reaction occurring at the interface. For the PE/starch blend system containing m-PE, the chemical reaction at the interface was verified by the evolution of ester and carboxyl groups in the FTIR spectra. The effect of the reactive compatibilizer on the interfacial morphology was also examined by scanning electron micrography (SEM). Enhanced interfacial adhesion was clearly observed for the blend system containing reactive compatibilizer. Tensile strengths of blend systems containing m-PE also increased noticeably compared with the corresponding system without compatibilizer. A similar observation was made for the breaking elongation data.