Blends of 50 wt% of poly(vinyl chloride) (PVC) and 40 wt% of styrene butadiene rubber (SBR) with 10 wt% of acrylonitrile butadiene rubber (NBR) as the compatibilizer were prepared in a Haake mixer. An inversion of phase continuity was observed when the sulfur concentration was chang ed from 0.0 to 2.0 parts per hundred parts of resins (phr) in the blends containing an NBR with an acrylonitrile content of 29.5 wt% (NBR-29). The SBR phase, which is continuous in the unvulcanized blend, changes progressively into the dispersed phase as sulfur concentration increases. This is explained by the viscosity increase of the rubber caused by crosslinking. There is no phase inversion as a result of increasing sulfur concentration when the compatibilizer NBR-29 was replaced by an NBR with an acrylonitrile content of 40 wt% (NBR-40). The SBR phase is discrete in the unvulcanized blend with NBR-40 as the compatibilizer. A change in phase continuity occurs during processing of the vulcanized PVC/NBR-29/SBR (50/10/40) blends. A torque peak in the torque curve during processing is correlated to the transition of the PVC phase continuity. There is a gradual increase in the torque curve after the torque peak. The rubber particle size decreases as a result of such a post-peak increase in the torque. The torque peak and the post-peak increase in the torque are absent in the case of the binary blends (PVC/NBR and PVC/SBR). The post-peak increase in the torque is attributed to the interfacial reaction between SBR and NBR that resides in the PVC phase. A novel method developed recently was applied to study the interface development during processing. An interface with a higher rubber concentration develops during processing of the compatibilized blends.