To improve recycled PET (rPET) properties, polyethylene terephthalate (PET) flakes were modified with different ratios of 4,4′-methylene diphenyl diisocyanate (MDI) as a chain extender (CE) using in-situ reactive extrusion. Intrinsic viscosity (IV), chemical bonding, thermal properties, and morphology, which strongly depended on MDI content, were investigated. New amide bonds, an indicator of chemical bonds between PET and MDI, were confirmed in the range 1505–1520 cm−1 by FTIR. Additionally, IV values of rPET with MDI (rPET-Ms) increased from 0.42 to 1.08 dL/g. Furthermore, crystallinity and oxygen barrier properties decreased with increasing MDI content. This may have been caused by hindered crystallization from increased random segments with the addition of MDI. There was lower overall migration than the stipulated overall migration limit (OML) in food simulants. These results suggest that in-situ reactive extrusion modification of PET flakes using MDI can provide value-added upcycled PET as an alternative to virgin PET (vPET).