This work aims at studying the role of interface properties on the rheological behavior of non-compatibilized and compatibilized polymer blends. Blends of polymethylmetacrylate (PMMA) with polystyrene (PS) and PS functionalized with oxazoline (PSOX) with concentrations of up to 20 w/w of the dispersed phase were used. It was observed that until a critical concentration is reached the increase in PSOX content leads to a significant increase in (a) the elasticity at low frequencies and (b) the relaxation time after cessation of flow, both in shear and extension. This points to a likely significant role played by interface elasticity. Since no chemical reactions occur between PMMA and the oxazoline groups of PSOX, the latter is probably caused by the partial miscibility between PMMA and PSOX. Beyond this critical concentration, the amount of PSOX does not have a significant influence on the rheological behavior of the blends. In order to gain an insight into the relaxation dynamics of the droplets and interface, and their relationship with the rheological behavior of the blends, small angle light scattering (SALS) was used in diluted blends (1 wt % of the dispersed phase) during step shear. SALS shows a slight deformation of dispersed phase in the vorticity direction for the 99PMMA/1PSOX blend while the droplets of the 99PMMA/1PS blend deforms in the flow direction only. This result confirms the large increase in the interfacial elasticity for the 99PMMA/1PSOX blend. (C) 2010 The Society of Rheology. [DOI: 10.1122/1.3439732]