Functional group containing MBS impact modifiers for the poly carbonate/ poly(butylene terephthalate (PC/PBT) alloy were synthesized and characterized in this study. The novel MBS consisted of three layers, in which the inner, middle, and outer layers were styrene butadiene rubber (SBR) latex, polystyrene, and a copolymer of the methacrylic acid (MMA) and the functional group containing vinyl monomer, respectively. Three different kinds of the functional monomers were used in this study, glycidyl methacrylate (GMA), acrylamide (AAM), and MAA. The functional group was used to improve the adhesion between the MBS and the PC/PBT alloy. Our results showed that the layer composition of the MBS exhibited a significant effect on the impact strength. A large variation of the impact strength from 14.1 to 23.6 ft-lb/in. was observed when the SBR content increased from 30 to 70%. An optimum amount (4 -6%) of the functional monomer enhanced the adhesion between the MBS and the PC/PBT alloy and thus improved the impact strength. Furthermore, a much smaller amount of the functional group containing MBS in the PC/PBT alloy than the conventional MBS could obtain an impact strength as high as 25.2 ft-lb/in.