A composite film of polymethylsilsesquioxane (PMSQ) and hydroxyl-terminated polydimethylsiloxane (PDMS) was prepared by incubating PMSQ prepolymer and PDMS solution in a vapor environment before thermal curing. Vapor incubation has a significant influence on the morphology and properties of the cured composite, and the vapor incubation was conducted under three different conditions, i.e., acidic, neutral, and basic. In the acidic vapor of a pH rather lower than the isoelectric point (IEP) of the silanol, the reaction between PMSQ and PDMS through silanol condensation was promoted by the protonation of silanol. PDMS rubber particles with a domain size of about 100 nm were formed in PMSQ matrix, and the flexible modulus of the film was unproved. While, the morphology of the resultant film was smooth and uniform after incubation in a neutral water vapor. The basic vapor facilitated the gelation of composite due to high pH inducing more rapid silanol condensation in PMSQ than phase separation. Moreover, excellent optical transparency, insulation, and thermal stability of the composite were also retained after the PDMS incorporation. (c) 2008 Wiley Periodicals, Inc. J Appl Polym Sci 111: 1454-1461, 2009