We toughened poly(butylene terephthalate) (PBT) by loading core-shell number CSR) type impact modifiers, consisting of a rubbery poly(n-butyl acrylate) core and a rigid poly(methyl methacrylate) shall. To optimize the dispersion of CSR particles into the PBT matrix during melt compounding, the shell surface was modified with different grafting ratios of glycidyl methacrylate (GMA) reactive with PBT chain ends. In PBT blends with a 20 wt % CSR loading, the dispersed rubbery phases showed discernible shapes depending on the grafted GMA content, from predetermined spheres with 0.25 +/- 0.05 mu m diameters to their aggregates in the 2-3 mu m diameter range. As a result, the interparticle spacing (tau) could be controlled from 0.25 to 4.0 mu m in the PBT blends containing the fixed rubber loading. The Izod impact strengths of these samples increased significantly below tau = 0.4 mu m. Additional thermal and morphological analyses strongly Supported the hypothesis that the marked increase in toughness of the blends was related to less ordered lamellar formation of the PBT matrix under the confined geometry. (C) 2010 Wiley Periodicals, Inc. J Appl Polym Sci 116: 1948-1957, 2010