The reactive insitu compatibilization of polyvinyl chloride (PVC) and Acrylonitrile¨CButadiene-Styrene resin (ABS) was realized in melt blending through Friedel-Crafts reaction between PVC and ABS with anhydrous aluminium chloride as catalyst. The effect of the amount of anhydrous aluminium chloride, the pretreatment of raw materials etc. factors on the in-situ compatibilization PVC/ABS blends by Friedel-Crafts alkylation reaction were researched. The structure and properties of PVC/ABS alloy materials were characterized by Fourier Transform Infrared Spectroscopy (FTIR), Thermogravimetric Analysis (TGA), Scanning Electron Microscopy (SEM) and tests of mechanical properties. The results showed that the peaks of 1704 cm-1 and 760 cm-1 in FTIR spectrum proves the substitution for multiposition of benzene; The TGA showed that the starting weightlessness temperature and the temperature of maximum weight loss rate of PVC/ABS alloy were respectively higher than that of pure PVC as 18¡æ and 15¡æ. SEM photos proved that amount of network structure were formed in the two-phase interface of PVC/ABS alloy with addition of anhydrous aluminium chloride. The compatibility of the two phase interface was improved, which achieved enhancing and toughening to PVC/ABS alloy. The best mass fraction of anhydrous aluminium chloride was 1.5% and the optimal length of time of the grinding re-treatment was 4h; the dispersion size of the ABS can be reduced, the contact area between the two phase and the catalyst can be increased by the grinding pre-treatment of raw materials though the High-energy nano impact mill, which can maximumly enhance the mechanical properties of the blends. When the ABS content is 5%, the anhydrous aluminium chloride content is 1.5%, the elongation at break of the PVC/ABS alloy reaches a maximum of 67.92%, increase 451.7% compare with 12.31% of the pure PVC, increase 50.93% compare with 45% of the pure ABS; When the ABS content is 40%, the anhydrous aluminium chloride co