Modified acrylonitrile-styrene-acrylate (MASA) were prepared by grafting with maleic anhydride and optimization was carried out. The compatibilizer with four parts of ASA-g-MA in 10 parts of acrylonitrile-styrene-acrylate (ASA) was found effective in improving the interface. On that basis, the different compositions of blends of polycarbonate (PC)/MASA terpolymer were compounded using a twin screw extruder. The blends,granules were then injection molded into a standard tensile specimens for mechanical, dynamic mechanical, and morphology characterization. The mechanical properties, such as, tensile behavior of melt mixed PC/modified ASA terpolymer blends at MASA content up to 52 vol % were evaluated. The tensile strength decreased with MASA concentration has been analyzed on the basis of interphase adhesion. Impact strength and elongation were increased with increase in ASA concentration up to 10 phr. Tensile modulus shows decrease with addition of ASA. Predictive models have been used to explain the tensile strength and modulus properties. The tensile modulus shows slightly negative deviation from rule of mixture indicating reduction in stiffness. Dynamic mechanical analysis shows evidence of partial miscibility. Morphology observations were also carried Out to further insight into the system. (C) 2009 Wiley Periodicals, Inc. J Appl Polym Sci 116: 486-492, 2010