The effect of two-step annealing, including solvent annealing and further-step thermal annealing on the inverted ternary polymer solar cells (PSCs), which are composed of poly(3-hexylthiophene-2,5-diyl) (P3HT):[6,6]-phenyl C-71-butyric acid methyl ester (PC71BM):2,4-bis[4-(NN-diisobutylamino)-2,6-dihydroxyphenyl] squaraine (SQ), was systematically investigated. The film morphology of ternary blends was characterized by X-ray diffraction and atomic force microscope. The results showed that a dramatic enhancement of power conversion efficiency from 1.32% to 4.42% was obtained due to the improved light harvesting, optimized self-assembled morphology and thermally induced crystallization of ternary blends. Especially, the optimized temperature of the thermal annealing process was remarkably decreased to 80 degrees C. It was also found that the two-step annealing process was crucial in achieving high performance, which could not only control the domain size of SQ but also maintain a well-ordered nanoscale structure within the ternary blends of P3HT:PC71BM:SQ (C) 2014 Elsevier B.V. All rights reserved.