Abstract Reactive modification of polycarbonate (PC) with a small amount of ultra-high molecular weight polydimethylsiloxane (PDMS) provides an effective route to a novel blend polymer with superior flow and excellent impact toughness. Low temperature impact toughness for such a blend was found to be comparable to polycarbonate copolymers made by interfacial copolymerization of bisphenol A and specialty silicones with phosgene. Interestingly, the blend also showed strong shear thinning behavior and a viscosity that is almost an order of magnitude lower than the starting PC resin. Analysis of the blend composition and blend morphology revealed the presence of both PC–PDMS copolymer and un-grafted siloxane as a dispersed phase in the polycarbonate matrix. The PC–PDMS copolymer provides a compatibilization effect for the stable sub-micron blend morphology in an otherwise immiscible PC–PDMS blend system. Improvement of low temperature ductility (e.g., at −40 °C) by PDMS was thus made possible. The lubricating effect from siloxane and the possibility of fibrillation flow at high shear stress are suspected to be the main reasons for high flow characteristics of these blends.