The optical properties and rheological properties were studied for binary reactive blends composed of poly(ethylene terephthalate-co-ethylene isophthalate) [P(ET-EI)] and a styrene-acrylate based copolymer with glycidyl functionality. The blade rotation speed in the internal mixer greatly affected the structure and properties for the blend system. Intensive mixing at a high rotation speed enhanced the optical transparency because of the reduced particle size of the dispersed phase. The graft copolymer generated by the reaction between P(ET-EI) and the modifier was responsible for the fine morphology. Furthermore, the copolymer also enhanced the elastic nature in the molten state because it acted as a long-chain branched polymer. (c) 2007 Wiley Periodicals, Inc.