To investigate the effect of PBT-PC interfacial strength on the fracture toughness and toughening mechanisms of the PBT/PC system, a series of PBT/PC blends with different content of in situ formed PBT-PC copolymers were made by melt blending. The in situ copolymer was separately prepared via reactive blending of the PBT and PC in the presence of a transesterification catalyst in a twin-screw extruder for a few minutes. The reactive extrudate (RE) was studied using a DSC and the existence of the PBT-PC copolymer in the RE was confirmed. Microstructure characterizations of the PBT/PC/RE blends revealed that the domain sizes of the PBT and PC decrease and the PBT-PC interfacial strength increases with the RE content. Compared with the PBT/PC blend, all the PBT/PC/RE blends have higher yield strength, elongation at break as well as tensile modulus. The quasi-static fracture tests show that fracture toughness of the blends increases with the RE content. Since the highest toughness was obtained with the blend having the highest RE content (7.5%), it is not certain at this stage whether adding more than 7.5% RE will further improve the fracture toughness. The impact toughness of the PBT/PC/RE blends was found to decrease with the increase of the PBT-PC interfacial strength, which confirms the failure mechanisms proposed in the Part-4 of this series. (C) 2003 Kluwer Academic Publishers.