In this study, an interpenetrating polymer network (IPN) based on a polyurethane (PU) and a partially end-capped unsaturated polyester (UPE) was prepared. The reaction-induced phase separation process of the IPN was studied using a phase contrast optical microscope and a transmission electron microscope (TEM), while reaction kinetics and onset of gelation were determined by a differential scanning calorimeter and a rheometer respectively. Except at low temperatures, the phase separation patterns were found to follow the spinodal decomposition mechanism. An interconnected phase developed quickly and was followed by coalescence of the periodic phase to form droplet/matrix type of morphology. A second level of phase separation also occurred within both the droplet and the matrix phases in some cases. The domain sizes resulting from both levels of phase separation gradually increased until the structure was locked by chemical gelation. Reaction temperature, PU reaction rate, and UPE reaction rate all had significant effects on the final morphology of the formed IPNs.