The utilization of sulfonated polyester ionomers as minor-component compatibilizers in blends of an amorphous polyester and polyamide was investigated. The blends were prepared using twin-screw extrusion and compared to solution blends to investigate the effect of elevated temperatures and shear mixing on blend miscibility and/or phase behavior. The phase domain sizes of the solution blends with respect to ionomer content were studied using small angle light scattering (SALS) and phase contrast optical microscopy. The thermal and mechanical proper-ties of the extruded blends were investigated using dynamic mechanical analysis (DMA) and tensile testing while the morphology was investigated using environmental scanning electron microscopy (ESEM). The interactions between the sulfonate group of the ionomer and the polyamide were characterized using FT-IR spectroscopy. Binary blends of the amorphous polyester and polyamide were immiscible with poor mechanical properties, while blends containing the polyester ionomer as a minor-component compatibilizer showed a significant reduction in the dispersed domain sizes and enhanced ultimate mechanical properties. The compatibilization mechanism is attributed to specific interactions between the sulfonate groups on the polyester ionomer and the amide groups of the polyamide. (C) 2004 Society of Plastics Engineers.