Rheology and flow-induced morphology were studied in immiscible polypropylene (PP)/polystyrene (PS) blends with a droplet-matrix microstructure. Two reactive precursors, maleic anhydride grafted PP and amino terminated PS, were added during the melt-mixing process to form a graft copolymer. The effects of both the amount of compatibilizer and the shear history on the rheological and morphological behavior were investigated systematically. Small amplitude oscillatory experiments and scanning electron microscopy were used to study the phase morphology. Shear history has an important effect on the morphology of the uncompatibilized blends. The droplet size refines with increasing shear rate. The decrease of this effect with increasing degrees of in situ compatibilization is mapped out. The results are discussed in terms of interfacial tension and the interfacial coverage. It turns out that most of the conclusions that were previously obtained on physically compatibilized blends are also valid for chemically compatibilized ones.