Poly(ethylene terephthalate) (PET) was blended with 5 wt % of an elastomeric block copolymer. The hydrogenated styrene-butadiene-styrene (SEES) elastomers were functionalized with 0-4.5 wt % maleic anhydride grafted on the midblock. Notched tensile tests in the temperature range -40-55 degrees C differentiated among the blends in terms of their toughness. The least effective elastomer was the unfunctionalized SEES; all the functionalized SEES elastomers effectively increased the toughness of PET. Fractographic analysis indicated that PET and the blend with unfunctionalized SEES fractured through a pre-existing craze. Although adhesion of the unfunctionalized SEES to the matrix was poor, the elastomer strengthened the craze somewhat, as indicated by an increase in length of the pre-existing craze when final separation occurred. A functionalized SEES caused the fracture mechanism to change from crazing to ductile yielding. Graft copolymer formed by reaction of PET hydroxyl end groups with the anhydride in situ was thought to act as an emulsifier to decrease particle size and improve adhesion. These factors promoted cavitation, which relieved the triaxiality at the notch root and permitted the matrix to shear yield.