This study examines how the relative role of coalescence suppression and interfacial tension reduction influence the particle size at various levels of in situ compatibilization, The polymers studied are polyethylene terephthalate (PET) as matrix and a polypropylene (PP) as dispersed phase compatibilized by a triblock copolymer of poly(styrene-hydrogenated butadiene-styrene) (SEBS) grafted with maleic anhydride. The interfacial tension was studied by the breaking-thread method, and it was used along with the morphology to characterize the emulsification efficacy of the copolymers. By modifying the concentration of MA grafted on the SEES, different levels of emulsification of the blends were obtained. A comparison of 1/99 and 10/90 PP/PET blends compatibilized by SEBS-g-MA allows one to distinguish the relative role of interfacial tension and coalescence suppression in diminishing particle size. It is shown that varying degrees of residual coalescence remain, depending on the level of %MA in the copolymer, A detailed study of the 2%MA system below interfacial saturation was carried out to shed further light on the dependence of coalescence suppression on emulsification level and interfacial coverage. After separating out the contribution of interfacial tension on particle size reduction, it is shown that coalescence suppression for this system increases gradually with areal density of modifier at the interface right up to the region of interfacial saturation. Finally, the interfacial and morphological data were used to test the ability of the Lee and Park model to describe coalescence in polymer blends. Reasonable agreement was found between the parameter c(1), describing the coalescence in that model, and the trends related to residual coalescence from this study.