The effect of microstructure modulation of thermoplastic ternary blends consising of crystalline polymer, amorphous polymer, and impact modifier on the macroscopic mechanical and thermal properties has been investigated. In this study, nylon6 was chosen for the crystalline polymer, modified poly(phenylene oxide)(PPO) for the amorphous polymer and styrene-ethylenebutylene-styrene(SEBS) tribock copolymer for the impact modifier. Reactive compatibilization was utilized to compatibilize the otherwise immiscible nylon6 and modified PPO. The functional groups used for the reactive compatibilization were maleic anhydride(MAH), which is highly reactive with amine terminal groups of nylon6, grafted onto SEBS impact modifier. The migration of the impact modifier, which was initially confined in PPO domain, to nylon continuous phase was observed as the amount of SEBS-MAH in the SEBS-MAH mixture was increased. We noted that the migration of the impact modifier from PPO domain to nylon continuous phase has strong effect on mechanical properties as well as thermal resistant properties of the resulting ternary blends.