Abstract Compatibility of natural rubber (NR)/polystyrene (PS) blend is poor and can be enhanced by the addition of a graft copolymer of natural rubber and polystyrene (NR-graft-PS). The effects of homopolymer molecular weight, copolymer molecular weight, copolymer concentration, processing conditions and mode of addition on the morphology of the dispersed phase have been investigated by means of optical microscopy. The addition of a small percentage of the compatibilizer decreases the domain size of the dispersed phase. The effect levels off at higher concentrations. The leveling off could be an indication of interfacial saturation. The experimental results were compared with the theoretical predictions of Noolandi and Hong. The addition of the graft copolymer improves the mechanical properties of the blend and attempts were made to correlate the mechanical properties with the morphology of the system. Attempts were also made to understand the conformation of the graft copolymer at the interface.