This study shows that a limiting dispersed phase particle size exists at very low concentrations for polymer blends mixed in an internal batch mixer and two types of twin-screw extruders. The Taylor limit for breakup of a single drop in a matrix underpredicts the limiting particle size; this discrepancy is attributed to viscoelastic effects. For uncompatibilized blends, the final particle size increases with the dispersed phase concentration due to increased coalescence. The particle size distribution also broadens at higher concentrations. Using in-situ reaction during blending or adding premade diblock copolymers suppresses coalescence resulting in smaller particle size and narrower particle size distribution. Using premade block copolymers is not as efficient in stabilizing morphology as using reactive polymers. It is shown that the main advantage of using compatibilizers in polymer blends is the suppression of coalescence achieved through stabilizing the interface, not a reduction in the interfacial tension. There is a critical shear rate in polymer systems where a minimum particle size is achieved. A qualitative explanation of why this occuss is given based on droplet elasticity.