The aim of the present research was to improve the impact strength of epoxy-based glass fiber-reinforced nanocomposites by the addition of polyethylene terephthalate (PET) fibers as reinforcement along with nanoclay. Hybrid nanocomposites containing clay as nano-filler and PET fibers as micro-reinforcement were fabricated. Nanocomposites with 1 phr clay and varying concentrations of PET fibers (1–3 phr) were processed using a vacuum-assisted hand layup. Addition of untreated PET fibers did not improve the impact strength of nanocomposites due to the lack of interaction between the inert PET fibers and other constituents. To improve the interfacial interaction, two different compatibilization procedures for the surface modification of PET fibers were used. In the first procedure, silane treatment of fibers was performed using two separate silane agents. In the second method, maleic anhydride (MAH) grafting was performed in the presence of ultraviolet radiations. Compatibilization of fibers was confirmed with scanning electron microscopy-energy dispersive spectroscopy (SEM-EDS) and Fourier transform infrared spectroscopy (FTIR). The results of impact and tensile testing showed an improvement of 19% in the impact strength of nanocomposites at 2 phr silane-treated PET fiber loading without significant loss in tensile strength. Finally, scanning electron micrographs of various nanocomposites were analyzed to correlate with the improved impact strength.