An attempt was made to modify the properties of poly(butylene terephthalate) (PET) by blending it with polyamide-6 (PA-6). Since PET and PA-6 are incompatible, epoxy resin was used as a compatibilizer to form an alloy. Alloys of PET and PA-6 with varying amounts (0-12%) of epoxy resin E-44 were prepared by melt blending. The notched Izod impact strength and flexural strength as a function of epoxy resin E-44 content were studied. Ultimate mechanical properties showed significant improvement on addition of epoxy resin E-44. The maximum increase of the notched Izod impact strength (approximate to 600%) of PBT/PA-6 blends is obtained at 3% (weight) epoxy resin E-44 content. The impact fracture surfaces were studied using scanning electron microscopy (SEM) : The SEM micrographs showed a noticeable change in the type of surface structure on adding epoxy resin E-44. DMTA also showed improved compatibility between PET and PA-6 on adding epoxy resin E-44. DSC studies showed that the presence of epoxy resin E-44 hindered the crystallization of both PET and PA-6 in the alloys. Wide-angle X-ray diffraction (WAXD) showed no obvious difference on crystallinity of PET and PA-6 in the alloys with the presence of a small amount of epoxy resin E-44.