Reactive blending has been usually utilized to stabilize morphology and to improve the properties of multi-component polymer blends by generating copolymers in situ at the interface. However, the present study on blends composed of poly(butylene terephthalate) (PBT) and functionalized styrene-acrylonitrile random copolymer (SAN) demonstrates another possibility for this method, i.e. tailoring morphology and thereby controlling the properties of polymer blends. By varying reaction conditions it was demonstrated that blends could be formed having the same ratio of [PBT]/[SAN] but which possessed completely different microstructural forms: a sea-island morphology with and without micelles, a corded dispersed phase morphology, and a highly oriented, layer-like morphology. (C) 2003 Elsevier Ltd. All rights reserved.