This research studies the properties of poly (butylene terephthalate) (PBT)-based systems toughened with thermoplastic polyurethane (TPU; 10, 20, and 30 wt%) and reinforced with multiwalled carbon nanotubes (CNTs; 0.1, 0.2, and 0.3 wt%). Different compositions prepared via melt mixing. Morphology studies showed good compatibility between the two polymeric phases in PBT/TPU. The addition of TPU to PBT reduced crystallization rate and melt temperature, while inclusion of CNTs had nucleation effect and increased the degree of crystallinity, crystallization, and melt temperatures. The existence of TPU in PBT caused significant enhancement in notch-impact resistant. The inclusion of CNTs to PBT/TPU blend led to the substantial improvements in tensile and flexural strengths and moduli. Dynamic mechanical thermal analysis revealed that the incorporation of CNTs into PBT/TPU enhanced storage modulus and heightened glass transition temperature. The storage modulus of PBT/TPU/CNT nanocomposite containing 0.5 wt% CNT was comparable with that of pure PBT particularly at high temperatures.