Compatibilization of thermoplastic elastomer blends containing polyethylene and recycled rubber was studied. Two compatibilization methods, reactive and non-reactive, were evaluated. 1-octene (EXACT 0210) was used as non- reactive compatibilizer. Phenolic resins (SP1045 & HRJ10518) were reactive agents. There existed optimal composition of compatibilizers which were 5% and 10% weight in case of reactive and non-reactive agents respectively. Octene-compatibilized blends gave high tear strength while resin- compatibilized mixtures gave high tensile strength in comparison with reference material. Comparison in compatibilizing capabilities HRJ-10518 and SP-1045 was carried out. The former one had better capabilities than the latter. Talcum was used as anti-agglomeration agent but it failed to work properly. Rubber particle size had substantial effect on mechanical strength in case of HRJ- 10518 based blends while no remarkable influence was found in case of octene-based counterparts. Calendaring pressure could be minimized without any adverse effect. Non-vulcanized rubber was utilized to enhance tear strength but its effect was off-set by the degradation of interfacial surface at high temperature. SEM analysis revealed homogeneous microstructure in both kinds of compatibilization. EXACT 0210- compatibilized blends showed more plastic deformation of the matrix than reactive blends. Stable connection between phases was also observed.