The preparation of polymer alloys from immiscible blends of poly(ethylene terephthalate) (PET) and nylon 6 was investigated using epoxy as a reactive compatibilizer during melt compounding. The domain size of nylon 6 in the PET matrix could be controlled to the submicron level by addition of 0.5-2.0 wt% epoxy to the blends. Melt spinning of the alloys were successfully performed in a pilot scale. The alloy fibers containing 5-10 wt% nylon 6 exhibited reasonable mechanical properties, with up to 3 g/d tenacity and 35% elongation. Moreover, the alloy fibers showed improved moisture absorption properties compared with that of neat PET fibers.