Immiscible blends of 1,2-polybutadiene and poly(4-bromostyrene) can be compatibilized by rather low concentrations of Pd-(0)[P(C6H5)(3)](4) at ambient temperature and 60 degreesC under argon. Two distinct glass-transition temperatures merge into a single glass-transition temperature at high enough concentrations of Pd-(0) (i.e., 2 or 3 mol %). Compatibilization does not occur if Pd-(0) is absent, triphenylphosphine is added without Pd-(0), or polystyrene is not functionalized. The methodology described herein is also useful for inducing melting-point depression of 2,7-dibromofluorene in ternary complexes with 1,2-polybutadiene and Pd-(0). A 72/28 complex of poly(4-bromostyrene) and 1,2-polybutadiene with 5.5 mol % Pd-(0) exhibits a reinforced rubbery response with a modulus of 1.2 x 10(7) N/m(2), a fracture strain of 235%, and a single glass-transition temperature. Mechanical properties of these compatibilized ternary systems compare well with those of styrene-butadiene block copolymers, particularly above 100% strain. A five-step mechanism that includes oxidative addition, olefin coordination, migratory insertion, beta -hydride elimination, and reductive elimination in the coordination sphere of the transition metal is proposed to illustrate how either poly(4-bromostyrene) or 2,7-dibromofluorene is linked covalently to alkene side groups in the diene polymer via the Heck reaction. (C) 2001 John Wiley & Sons, Inc.