Blends of poly(vinyl chloride) (PVC) and chlorinated polyethylene‐chlorinating graft‐hydroxy ethyl acrylate copolymer (CPE‐cg‐HEA) were prepared. CPE‐cg‐HEA, as toughening modifier, is a graft copolymer with a backbone of chlorinated polyethylene (CPE) and branched chains of poly(2‐hydroxy ethyl acrylate) (PHEA). Compared with PVC/CPE, CPE‐cg‐HEA demonstrated better toughening effects on the blends in the tensile strength, elongation at break, and impact strength. Particularly, compared to PVC/CPE blends PVC/CPE‐cg‐HEA blends with 5 phr CPE‐cg‐HEA showed an increases in the tensile and notched impact strength by 17.9 and 30% respectively, compared to the PVC/CPE blends. Differential scanning calorimetry analysis indicated that the miscibility of PVC/CPE‐cg‐HEA was better than that of PVC/CPE. An analysis of morphological structure showed that the grafting component of PHEA onto CPE promoted amalgamation between the primary particles of PVC and CPE‐cg‐HEA. Further research suggested that the toughening mechanism of the PVC/CPE‐cg‐HEA blends was different from that of the PVC/CPE blends. © 2011 Wiley Periodicals, Inc. J Appl Polym Sci, 2011