The use of newly developed polymer processing technologies to enable the microstructure control of nonreactive and reactive polymer systems, which up to now have been manufactured with conventional chemical polymerization processes, has been rapidly becoming popular, particularly in the field of polymer alloy systems. In this article the mechanisms of morphological development and its control for polymer alloys used mostly in a twin-screw extruder have been reviewed mainly from our studies. And furthermore, on-line monitoring and handling techniques developed at The Japan Steel Works are described in relation to the evolution of microstructure of polymer systems in a twin-screw extruder.