The impact energies of different polyethylene-ground rubber tire (GRT) composites were investigated. All the thermoplastic composites were prepared on a Haake Buchler batch mixer and injection molded test specimens were tested on Rheometrics drop weight instrumented impact tester. Addition of small amounts of functional polymers increases the impact energy of the polyethylene-GRT composite as much as 60%. The percent improvement in the impact energy for linear low density polyethylene (LLDPE) and the composites prepared from them is greater than for the corresponding high density polyethylene (HDPE) composites. Precoating of GRT particles with ethylene-acrylic acid (EAA) copolymers improves the impact energy of the composite, whereas precoating with the other functional polymers does not. An attempt has been made to identify the role of the functional polymers as to whether they act as toughening agents for the polyethylene matrix or coupling agent at the polyethylene-GRT interface. The results show the increase in impact energy resulting from the addition of styrene block copolymers is due to toughening of the polyethylene matrix while the reactive ethylene copolymers increase the impact energy by a coupling action with GRT.