The microstructure and mechanical properties of the blends consisting of polystyrene and high-density polyethylene and/or styrene-butadiene-styrene were studied. The HDPE forms long fibers in both the PS/HDPE and PS/HDPE/SBS blends. The binary blends exhibit declined mechanical properties at all compositions. Mechanism study suggests that craze formation in PS followed by unstable crack propagation along the weak PS-HDPE interface is the major failure mechanism for the low impact strength of the binary blends. In the ternary blends, the SBS forms a thin layer covering the HDPE fibers, which improves the PS-HDPE interfacial strength and mechanical properties of the blends. The debonding-cavitation at the PS-HDPE interface releases the plastic constraint and enables shear deformation at the crack tip. Moreover, the HDPE-fiber-pullout promotes shear deformation of PS. Both mechanisms greatly improve the toughness of the ternary blends.