Transient and steady-state deformations and breakup of viscoelastic polystyrene droplets dispersed in viscoelastic high-density polyethylene matrices were observed in a simple steady shear flow between two transparent parallel disks. By separately varying the elasticities of the individual blend components, the matrix shear viscosity, and the viscosity ratio, their effects on the transient deformation, steady-state droplet IF size, and the breakup sequence were determined. After the startup of a steady shear flow, the viscoelastic droplet initially exhibits oscillations of its length in the flow direction, but eventually stretches preferentially in the vorticity direction. We find that at fixed capillary number, the oscillation amplitude decreases with increasing droplet elasticity, while the oscillation period depends primarily on, and increases with, the viscosity ratio. At steady-state, the droplet length along the vorticity direction increases with increasing capillary number, viscosity ratio, and droplet elasticity. Remarkably, at a viscosity ratio of unity, the droplets remain in a nearly undeformed state as the capillary number is varied between 2 and 8, apparently because under these conditions a tendency for the droplets to widen in the vorticity direction counteracts their tendency to stretch in the flow direction. When a critical capillary number, Ca-c, is exceeded, the droplet finally stretches in the vorticity direction and forms a string which becomes thinner and finally breaks up, provided that the droplet elasticity is sufficiently high. For a fixed matrix shear stress and droplet elasticity, the steady-state deformation along the vorticity direction and the critical capillary number for breakup both increase with increasing viscosity ratio. (c) 2007 Elsevier Ltd. All rights reserved.