In this study, we have investigated morphology evolution of polymer blends during extrusion. By choosing two polymers, high density polyethylene (PE) and poly (1,4-butylene terephthalate) (PBT), having a large difference in melting temperature, we could control the viscosity ratio of the blend as well as the morphology. The morphology of the dispersed phase evolved from film to fibril and to droplet structure depending on thermal and deformation history. We could maintain the film or fibril structure in a final product by keeping the dispersed phase deformable and rigid enough to avoid the relaxation that is related with instability originating from the interfacial tension. The anisotropic structures (film and fibril) were found to enhance the rheological properties significantly, but in different manners under shear and extensional flow fields. This study shows that diverse morphology can be obtained by controlling processing conditions, and the rheological properties can be dramatically enhanced by morphology control. (c) 2005 Wiley Periodicals, Inc.