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Blends of poly(ethylene-co-vinyl alcohol) (EVOH) with maleic anhydride-grafted-poly(ethylene-octene) (POE-g-MAH) were prepared by blending extrusion in order to improve the toughness and flexibility of EVOH. The compatibility behavior of these blends with POE-g-MAH content range from 0 to 25 wt% was studied using mechanical, thermal, infrared, and morphology characterization techniques. The mechanical test results showed that POE-g-MAH can significantly improve the impact toughness of EVOH with a brittle-tough transition appeared at the POE-g-MAH content of 20 wt%. A huge increase of toughness of the blend was also observed when the POE-g-MAH content was increased to 15 wt%. The thermal analysis of the blends demonstrated that the thermal stability of EVOH is improved with the addition of POE-g-MAH, adding 20 wt% or more POE-g-MAH can effectively decrease the crystallinity of EVOH and greatly improve compatibility between the two components. The existence of esterification between anhydride groups in POE-g-MAH and hydroxyl groups in EVOH in melt processing was confirmed using Fourier transform infrared technique. Morphology analysis of the Izod impact fractures has clearly shown the mechanisms for these blends to change from brittle to tough with increasing the POE-g-MAH content. POLYM. ENG. SCI., 53:2093–2101, 2013. © 2013 Society of Plastics Engineers