Whether interfacial tension between two molten polymers can be reduced significantly by the formation of copolymer at the interface by chemical reaction of functionalized chains is the question addressed by this paper. To answer it, model experiments are carried out by grafting of benzylamine end-functionalized deuterated polystyrene (dPS-NH2) onto poly(styrene-r-maleic anhydride) (PSMA) random copolymer at an initially planar melt interface between polystyrene (PS) and PSMA. Various volume fractions of dPS-NH2 with polymerization indices N = 33, 55, and 270 were mixed with PS and then reacted with PSMA above the T-g of PS and PSMA. The interfacial excess, z*, of the dPS portion of the graft copolymer formed at the boundary was measured using forward recoil spectrometry. The values of normalized grafting density z*/R-g where R-g is the radius of gyration of dPS-NH2, are observed to be as large as 40, 9, and 4 for the N = 33, 55, and 270 dPS-NH2 chains, respectively. These large values signal the formation of a layer of microemulsion which occurs when the interfacial tension of the flat interface is driven negative by the increasing graft copolymer excess at the interface. The interfacial instability is followed by monitoring the positions of Au particles deposited on the original (flat) interface using cross-sectional transmission electron microscopy (TEM). Evidence of the interfacial corrugation induced by the instability is also available from scanning force microscopy (SFM) of the exposed PSMA interface after selective removal of PS using a solvent wash. The length scale of the corrugation is around 200 nm, which is the same magnitude as the size of the emulsion droplets shown by TEM near the interface. The onset of the interface instability occurs at critical values of z*/R-g of about 1.8 for N = 55 and z*/R-g of about 2.5 for N = 270 dPS-NH2 chains. These values are predicted qualitatively by self-consistent mean field theory.