A reactive compatibilizer, mercapto-functionalized EVA (EVASH), in combination with styrene-butadiene block copolymer (SBS), was used to compatibilize the blends of polystyrene (PS) and ethylene-vinyl acetate copolymer (EVA). The reactive compatibilization was confirmed by the presence of insoluble material and from dynamic-mechanical analysis. In addition to a more uniform morphology with small phase size, the compatibilization also provided excellent stabilization of the morphology, with an almost complete suppression of coarsening during annealing. As a consequence, a substantial increase on the elongation at break without significant influence on ultimate tensile strength was achieved for compatibilized blends with different compositions. (c) 2005 Wiley Periodicals, Inc.