A new kind of blends of polyvinyl chloride (PVC)/nylon terpolymer was reported in this article. Two compatibilizers were used in this study: one is a terpolymer of ethylene-n-butyl acrylate-monoxide (EnBACO); the other is terpolymer of EnBACO grafted with maleic anhydride (EnBACO-g-MAH). The observation of scanning electron microscope (SEM) reveals that the PVC/nylon terpolymer blends have a two-phase structure; and the nylon terpolymer phase is the continuous phase, and PVC domains in the PVC/nylon terpolymer/EnBACO-g-MAH blends have fine dispersion over a broad range of the PVC/nylon terpolymer ratio. EnBACO-g-MAH is more compatible with the nylon terpolymer than EnBACO. EnBACO and EnBACO-g-MAH have different effects on the glass transition temperatures of the PVC phase and nylon terpolymer phase in the blends. The notched Izod impact strength, tensile strength, elongation at break, Vicat softening temperature (VST), and melt flow index (MFI) critically depend on PVC/nylon terpolymer ratio, the kinds and concentration of the compatibilizers. The PVC/nylon terpolymer/EnBACO-g-MAH blends display a good combination of high toughness, high flowability, and high VST under low load.