This paper concerns the effects of processing parameters on the in situ compatibilization of polypropylene (PP) and poly(butylene terephthalate) (PET) blends by one-step reactive extrusion in a corotating intermeshing twin screw extruder. This in situ compatibilization process was characterized by a sequential arrangement for the free radical grafting of glycidyl methacrylate (GMA) onto PP and the interfacial compatibilization reaction between the GMA functionalized PP and the terminal carboxylic group of the PET. Among the processing parameters examined were feed rate (Q), screw speed (N), and specific throughput (Q/N). Their effects were evaluated by the associated mechanical properties of final blends in terms of elongation at break and impact strength. Results showed that elongation at break and impact strength increased virtually linearly with decreasing Q or N. Moreover, for a particular Q/N, they increased with decreasing Q with a concomitant decrease in N. Further analysis of these results showed that it is through residence time that these parameters affect the performance of the above mentioned in situ compatibilization process.