The processing of an immiscible polymer blend using melt blending (i.e., extrusion) often results in a polymer material with inferior mechanical performance compared with its virgin counterparts. Here, we report and compare the properties of immiscible polymer blends produced from industrial mixed plastic waste from shredder residue comprising at least four different polymers (acrylonitrile butadiene styrene, polystyrene, polypropylene, and polyethylene) with and without a prior melt-blending step employed. As anticipated, mixed plastic blend produced with a prior melt-blending step exhibited a more homogeneous microstructure, resulting in brittleness, poor work of fracture, and single-edge notched fracture toughness with a flat R-curve. Without the intimate polymers mixing arising from melt blending, the resulting mixed plastic blend was found to possess a more heterogeneous concentric ellipsoid microstructure with large single polymer domains. This mixed plastic blend demonstrated progressive failure under uniaxial tensile loading, along with a more ductile single-edge notched fracture toughness response accompanied by a growing R-curve. Digital image correlation and fractographic analysis revealed that melt blending created a large number of incompatible polymer boundaries that acted as stress concentration points, leading to brittleness and earlier onset catastrophic failure. The more heterogeneous mixed plastic blend produced without using a prior melt-blending step contains a smaller number of incompatible polymer boundaries. Additionally, the presence of larger single polymer domains also implies that the mechanical characteristics of the single polymer can be exploited in the immiscible mixed plastic blend. Our work opens up a simple pathway to add value to mixed plastic waste from shredder residue for use in engineering applications, diverting them away from landfill or incineration.