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Polymer blend compatibilization is an attractive solution for mechanical recycling of mixed plastic waste because it can result in tough blends. In this work, hydroxy-telechelic polyethylene (HOPEOH) reactive additives were used to compatibilize blends of polyethylene terephthalate (PET) and linear low-density polyethylene (LLDPE). HOPEOH additives were synthesized with molar masses of 1–20 kg/mol by ring-opening metathesis polymerization of cyclooctene followed by catalytic hydrogenation. Melt-compounded blends containing 0.5 wt % HOPEOH displayed reduced dispersed phase LLDPE particle sizes with ductilities comparable to virgin PET and almost seven times greater than neat blends, regardless of additive molar mass. In contrast, analogous blends containing monohydroxy PE additives of comparable molar masses did not result in compatibilization even at 2 wt % loading. The results strongly suggest that both hydroxy ends of HOPEOH undergo transesterification reactions during melt mixing with PET to form predominantly PET–PE–PET triblock copolymers at the interface of the dispersed and matrix phases. We hypothesize that the triblock copolymer compatibilizers localized at the interface form trapped entanglements of the PE midblocks with nearby LLDPE homopolymer chains by a hook-and-clasp mechanism. Finally, HOPEOH compounds were able to efficiently compatibilize blends derived solely from postconsumer PET and PE bottles and film, suggesting their industrial applicability.