Poly(ethylene terephthalate)/poly(ethylene-octene) (PET/POE) blends compatibilized with glycidyl methacrylate grafted poly(ethylene-octene) (mPOE) were prepared by melt blending using a twin screw extruder. The effects of the molecular weight of the PET matrix on the morphology and properties of the PET/POE/mPOE blends are described. The results of the SEM analysis showed that the average particle diameters of the dispersed phase decreased with an increase in the PET molecular weight. The results of the mechanical property tests showed that the notch Charpy impact strength and elongation at break of the PET/POE/mPOE blends improved with an increase in the PET molecular weight. However, the flexural strength, flexural moduli and tensile strength were nearly unchanged. The crystallization rate of PET in the PET/POE/mPOE blends improved with decreasing PET molecular weight.