During the blending process, Styrene–acrylonitrile–glycidyl methacrylate (SAG) was grafted through in-situ formation of PA66 as a compatibilizer for polyamide 66/poly (2,6-dimethyl-1,4-phenoxy) (PA66/PPO) composites. The compatibilizer has a obvious advantage on the PA66/PPO blends terminal behavior in the dynamic rheological analysis. Moreover, the gap between the PA66 and PPO glass-transition temperatures decreases with the SAG content increasing, which indicates improved compatibility. The morphology of the PA66/PPO/SAG blends was analyzed by scanning electron microscopy, which revealed the particles narrower size distributions and became smaller after adding SAG. In addition, the compatibilization improves the mechanical properties of blends significantly when SAG reached 5 by weight per hundred resins (phr). This is attributed to enhanced interfacial adhesion and finer dispersion morphology. However, when 7 phr of SAG are added, the exceeded compatibilizer produces a limitation on the improvement of the mechanical properties. Our results indicate that the optimal concentration of the compatibilizer, SAG, is between 3 and 5 phr for PA66/PPO (60/40).