Microstructural deformation behaviour in polystyrene-based compatible polymer blend systems was studied using transmission electron microscopy (TEM) and microdensitometry. Four different binary compatible blend systems were employed and characterized in this investigation: polystyrene (PS) and poly(2,6-dimethyl-1,4-phenylene oxide) (PPO), PS and poly(vinyl methyl ether) (PVME), PS and poly(α-methylstyrene) (PαMS), and PPO and PαMS. Individual craze and shear deformation zone (DZ) microstructures were examined by TEM. For TEM observations, specimens deformed in situ on a TEM grid (loaded condition) were utilized. TEM micrographs showed that, for PS/PPO blends, deformation mode transition from crazing to shear DZ occurred around 25% PPO inclusion. For PS/PVME blends, this transition occurred around 20% PVME inclusion. For PS/PαMS blends, the deformation mode was totally controlled by crazing regardless of composition. For PPO/PαMS blends, deformation mode transition from shear DZ to crazing occurred around 25% PαMS inclusion. Quantitative analyses of these crazes and shear DZs were conducted utilizing microdensitometry of the TEM negatives in the manner developed by Lauterwasser and Kramer. From the microdensitometry, molecular parameters such as fibril extension ratios (λs) were determined. Microdensitometry results showed that λ decreased as the PPO content increased in the PS/PPO blends, and, for 100% PPO, only shear DZs were observed. For PS/PVME blends, λ also decreased as the PVME content increased. For PS/PαMS and PPO/PαMS blends, λ increased as the PαMS content increased. These results were analysed in terms of existing entanglement and intermolecular interaction models in compatible blends. From this analysis, it is concluded that the overall microstructural deformation behaviour of binary compatible blends cannot be fully explained by either entanglement density or intermolecular interaction model alone. Rather, the combined entanglement density and intermolecular interaction model can explain the microstructural deformation behaviour in binary compatible blends well.