The processing of poly(ethylene terephthalate) (PET) involves thermal and hydrolytic degradation of the polymer chain, which reduces not only the intrinsic viscosity and molecular weight, but also the mechanical properties of recycled materials. A novel PET/bisphenol A polycarbonate/styrene-ethylene-butylene-styrene alloy based on recycled PET scraps is prepared by low temperature solid-state extrusion. Hydrolysis and thermal degradation of PET can be greatly reduced by low temperature solid-state extrusion because the extrusion temperature is between the glass-transition temperature and cold-crystallization temperature of PET. Modification of recycled PET by low temperature solid-state extrusion is an interesting method; it not only provides an easy method to recycle PET scraps by blend processing, but it can also form novel structures such as orientation, crystallization, and networks in the alloy. (c) 2006 Wiley Periodicals, Inc.