Polycarbonate with anhydride end groups (PC-anh) was prepared by the reaction between polycarbonate having hydroxyl end groups (PC-OH) and trimellitic anhydride chloride (TMAC). Hydroxyl or anhydride terminated polycarbonates were characterized by Fourier transform infrared spectroscopy (FTIR) and nuclear magnetic resonance (NMR) spectroscopy. The reaction of PC-anh with polystyrene containing oxazoline reactive groups (RPS) was confirmed not only by the torque measurement during melt blending of these two but also by FTIR spectroscopy of the reactive blend obtained. Polycarbonate (PC)/polystyrene (PS) compatibilized blends were prepared by melt blending along with their reactive counterparts, PC-anh and RPS in the Haake mixer. The morphologies of these blends were examined by the scanning electron microscope (SEM). The compatibilized blends with reactive components showed relatively finer morphologies than the uncompatibilized blend without reactive components. Izod impact strength and rheological property of these blends were also investigated. (C) 2000 John Wiley & Sons, Inc.