Ethylene acrylic acid copolymer (EAA) is a typical water-tree retardant. Traditional method for improving water-tree resistance of XLPE was adding EAA to XLPE by melt blending. However, the poor compatibility between EAA and XLPE easily leads to phase separation and interfacial defects, adversely affecting the material’s mechanical and electrical properties. Based on the principle of click chemistry, this paper utilizes low-density polyethylene grafted with glycidyl methacrylate (LDPE-g-GMA) as a compatibilizer, and the modifier with better compatibility with LDPE could be prepared due to the ring-opening reaction between the epoxy group of LDPE-g-GMA and the carboxyl group of EAA. The modifier was added to XLPE to improve EAA dispersion and enhance interfacial bonding strength. Thermal elongation showed that the crosslinking degree of XLPE with the added modifier complies with power cable standards. Accelerated water-tree aging tests demonstrated that the average water-tree length in XLPE with the modifier was 17.72% lower than EAA-blended XLPE. Both electrical and mechanical properties were improved. This study shows that utilizing the principle of click chemistry enables uniform dispersion of EAA. On one hand, this allows polar molecules to capture water molecules more efficiently, enhancing water-tree resistance. On the other hand, good dispersion reduces material defects, leading to a synergistic improvement in electrical properties.