The effects of osmolytes, such as trimethylamine N-oxide (TMAO), on the phase transition in an aqueous solution of polymer, protein, or DNA are very complex, and several phase transitions can occur. In order to explore such effects, we take a simple ternary system of poly(N,N-diethylacrylarnide) and a 'favorable solvent pair TMAO and water to monitor the reduction in the miscibility of the polymer using small-angle neutron scattering (SANS) and dynamic light scattering (DLS). The result shows that the LCST of PDEA solutions is significantly depressed by TMAO. Although DLS data dearly show that aggregates can form, as precursors in the homogeneous one phase region depending on the TMAO concentration, after removing the low-q aggregate region, the three-component system still obeys the mean-field theory. Based on the ternary random phase approximation (RPA) theory, three Flory-Huggins interaction parameters, i.e., XD2O-TMAO, XPDEA-TMAO, and x(pDEA-D20), are obtained to reveal the microscopic origin of this shift in LCST; that is, the strong TMAO-D2O interaction leads to the decrease of LCST. Our study opens up many directions to explore effects such as the interference between aggregation and microphase separation.