The mechanical properties of thermoplastic starch (TPS) and poly(hydroxy ester ether) (PHEE) blends were studied as a function of the starch concentration. The moisture level present during processing significantly affects the morphology. A dispersed droplet morphology was observed even at very high starch levels at low moisture levels. On the other hand, the dispersed phase was significantly deformed under high moisture conditions, leading to fibrillar and laminar types of morphologies at high starch levels. The change in morphology has a significant effect on the mechanical properties. The presence of elongated starch domains improved the tensile strength and modulus of the blends with no loss in ductility. The blend modulus could be effectively represented by the particular morphology present at any given starch concentration range, using a generalized form of Kerner's equation. The properties of the blends changed with the conditioning time and relative humidity (RH), due to the change in the moisture content of each phase. An attempt was made to express the blend modulus as a function of the relative modulus of the two phases, calculated at any given RH or conditioning time. The data could be shifted fairly well from one RH to another under equilibrium conditions. However, a shift from one conditioning time to another was difficult, owing to the slower kinetics of moisture exchange at higher amounts of PHEE, which has to be taken into account.