A reactive polypropylene (PP) containing oxazoline functional groups was prepared by the melt grafting of 2-iso-propenyl-2-oxazoline onto a PP homopolymer and used to introduce varying amounts of interfacial chemical reaction in PP/acrylonitrile-co-butadiene-co-acrylic acid rubber (NBR) blends. A technique has been successfully developed to control the rubber particle sizes of PP/NBR blends such that various PP/NBR blends with the same rubber particle size can be obtained by using different combinations of processing conditions and the amount of interfacial reaction. It has been found that moderate levels of interfacial chemical bonding are required for a transition from a brittle to ductile failure to be observed in PP/NBR blends. Blends without any interfacial chemical bonding showed no improvement in impact energy whereas up to a 13.5-fold improvement in impact energy (notched Charpy test) was observed for reactive blends above the brittle-tough transitions.