The toughness of polycarbonate/polyethylene (PC/PE) alloy compatibilized with o, o'-diallyl bisphenol A ether (DBAE) grafted polyethylene (DBAEgPE) was significantly improved in comparison with that of the neat PC/PE alloy and the additivity value. Especially for the compatibilized alloy at 15 phr of PC concentration, the impact strength and the critical strain energy release rate (G(1)c) reached 55.0 kJ/m(2) and 1.20 J/mm(2), respectively, compared to 19.0 kJ/m(2) and 0.18 J/mm(2) for the uncompatibilized alloy. Fibre formation and fracture of the dispersed PC phase were observed for the alloy with high energy absorbing capability through scanning electron microscope (SEM). Employing a structural diagram, fibre formation based toughening (FFBT) was put forward and it was attributed to the fibre formation and fracture which occurred under the influence of the external impact force and the pressure acting on the dispersed PC particles caused by the difference between thermal shrinkage of PC and PE from processing temperature to room temperature.