We report on the effect of phase immiscibility on the structure and optical properties of spin-coated polyvinylpyrrolidone (PVP) and polyphenylene oxide (PPO) polyblends using X-ray diffraction, IR absorption, optical absorption and florescence spectroscopic techniques. The broad diffraction halos in the X-ray diffraction patterns reveal the semi-crystalline nature for the synthesized polyblends. The change in q value for both the deconvoluted halos confirms the variation in the molecular interactions while the decrease in their fwhm values signify the enhancement in crystalline nature with the blending. The infrared absorption studies were used to elucidate the interaction of functional groups in the spin-coated polyblends. The position of three excitonic bands and the red shift in the optical absorption edge with the increase in the PPO content has been observed for these polyblends. The six time enhancement in fluorescence peak intensity in visible region (similar to 500 nm) for immiscible blend (50/50) composition has been of importance for the design of low cost luminescent and photovoltaic devices.