To improve the physical properties of recycled polyester chips, virgin PET chips were compounded with the ratio of 20 wt%, 40 wt%, and 70 wt%. Recycled PET chips blended with virgin PET chips exhibited decreased molecular weights and intrinsic viscosities compared with 100% recycled PET chips and virgin PET chips, and this was caused by thermal and hydrolytic decomposition. End-group contents and MFI both increased in the blended PET chips. As the virgin PET chip contents increased in the recycled PET chips, the melting temperature tended to increase. Recycled PET chips exhibited a higher crystallization temperature compared with virgin PET chips. Morphologies of recycled PET films were analyzed by scanning electron microscopy (SEM). Yellowing of recycled PET chips resulted from intramolecular cross-linking and oxidation reactions. As virgin PET chips were compounded with recycled PET chips, yellowing was reduced. The ash contents were increased in the recycled PET chips which were blended with virgin PET chips. As recycled PET chip contents were similar to those of virgin PET chips, the ash contents were the highest in the experimental materials.