Thermal degradation mechanism and mechanical properties of poly(vinyl chloride) (PVC) in PVC-polyethylene (PE) mixtures with varying types, contents, and melt flow indexes of the PE were studied. The degradation behavior was investigated in terms of decomposition temperature and glass transition temperature, polyene index, and morphology of the PVC in the mix. The results suggested that adding small amounts of PE (5 phr) in PVC-PE mixtures could thermally stabilize the PVC, as noted by an increase in its decomposition temperature. At higher PE loading, the PVC encountered more degradation as a result of a consumption of the heat stabilizer by PE radicals and the dehydrochlorination reaction. A radical transfer reaction was proposed to explain the degradation mechanism of the PVC in the PVC-PE melt, specifically a progressive increase of the glass transition temperature of the PVC in the mix as a result of increasing PE content. The PVC-PE blend using HDPE with high MFI exhibited more pronounced thermal and structural changes of PVC. The mechanical properties of the PVC-PE blend were very much dependent on the PE content, but slightly affected by the type and MFI value of the PE. The dispersion level of the PE in the PVC phase was found to play an important role in affecting the mechanical properties of the PVC-PE mixtures.