A linear triblock copolymer, poly(styrene-b-etylene/butylene-b-styrene)(SEBS) thermoplastic elastomer (TPE) grafted with maleic anhydride was used for compatibilization of PP/PBT blends. PP/PBT blends of different mass ratios 60/40, 50/50, 40/60 were mixed with 2.5, 5.0 and 7.5 wt.% of SEBS copolymer in a twin screw extruder. Differential scanning calorimetry and dynamic mechanical analysis were performed to define the phase structure of PP/PBT blends. TPE with a rubbery mid-block shifted the glass transition of PP/PBT blend towards lower temperatures, and significant decrease the crystallization temperature of a crystalline phase of PP component was observed. The influence of the amount of compatibilizer and the blend composition on the mechanical properties (tensile and flexural strengths, toughness and moduli) was determined. Addition of 5 wt.% of a triblock TPE led to a three-fold increase of PP/PBT toughness. A significant increase of impact properties was observed for all materials compatibilized with the highest amount of SEBS copolymer.