In this paper, the influence of the addition of a copolymer on the interface, molecular orientation and properties of biaxially stretched PP-PET is studied. For most homopolymers, biaxial stretching results in an improvement of the properties caused by chain orientation. Blending with a second homopolymer and creation of a multiphase system leads to the occurrence of decohesion phenomena between both polymers, the net result of which are diminished properties. In this work the decohesion process and the influence of an interfacial modifier on that phenomenon is measured quantitatively. In order to determine the point of interfacial saturation by the modifier, the morphology is also studied via the emulsification curve for this system. The crystallinity of the system is examined by WAXS. In most non-stretched polymer blends, it is the elongation at break and impact properties, which are the most significantly affected by the state of the interface. The process of biaxial stretching and resulting decohesion causes even a low strain property such as the Young＇s modulus to also become highly sensitive to the state of the interface. When a copolymer is added to the blend, the modulus and stress at break after stretching are dramatically improved compared with the uncompatibilized blend. It is shown for the 10%PP-90%PET blend, where decohesion was entirely suppressed by addition of the interfacial modifier, that maximum property improvement occurs at copolymer levels below interfacial saturation. WAXS measurements on the uncompatibilized biaxially stretched system demonstrate an isotropic system with respect to molecular orientation. Upon addition of the interfacial modifier preferential chain orientation is observed in the machine and transverse direction. This is related to the suppression of decohesion around the dispersed phase caused by the increased adhesion between the matrix and the dispersed phase.