The production of bead foams is steadily growing. Still, only a few polymers are used as bead foams. Most common are expanded polystyrene (EPS) for packaging and expanded polypropylene (EPP) mainly for automotive applications. One major drawback of these established materials is their low thermal resistance (heat deflection temperature), which is approximately 80 °C for EPS and 110 °C for EPP, respectively. Especially for technical insulation applications (e. g. close to an engine) bead foams that can withstand a permanent exposure to heat are demanded. Therefore, the interest in engineering polymers such as polybutylene terephthalate (PBT) for the use as bead foam material is continuously growing. In an earlier work Köppl et al [1] reported the continuous production of bead foams by foam extrusion coupled with underwater granulation (UWG). The work pointed out the main issues of PBT foaming, which are (i) the poor rheological properties of this polyester, namely a low melts strength that limits the foam expansion and (ii) the narrow processing window for foaming. Another drawback was (iii) even though the production of E-PBT bead foams was possible, the foam beads failed to fuse under the conditions used in the steam chest molding (SCM) process. The present work describes the chemical modification of the PBT with a commercial chain extender (CE) as well as the production of bead foams with the UWG and the successful fusion of the E-PBT in SCM process. It could be shown that by addition of chain extender the melt strength is increased and thereby enables a higher expansion and the formation of small and homogeneous distributed cells. The addition of CE lead to improved rheological properties, e. g. strain hardening. Optimum conditions were found for 1 wt.-% CE resulting in a significant higher melt strength and bead foams with densities of 168 kg/m3 and cell sizes of 155 µm. A higher heat resistance than for EPS and EPP could also be shown. [1] Köppl et al.: J. Cell. Plas. 2014 50(5)