To evaluate the compatibilizing effects of isocyanate (NCO) functional group on the polyethylene terephthalate/low density polyethylene (PET/LDPE) blends, LDPE grafted with 2-hydroxyethyl methacrylate-isophorone diisocyanate (LDPE-g-HI) was prepared and blended with PET. The chemical reaction occurred during the melt blending in the PET/LDPE-g-HI blends was confirmed by the result or IR spectra. In the light of the blend morphology, the dispersions of the PET/LDPE-g-HI blends were very fine over the PET/LDPE blends. DSC thermograms indicated that PET micro-dispersions produced by the slow cooling of the PET/LDPE-g-HI blends were largely amorphous, with low crystallinity, due to the chemical bonding. The tensile strengths of the PET/LDPE-g-HI blends were higher than those of the PET/LDPE blends having a poor adhesion.