The effect of Ethylene Methyl Acrylate (EMA) copolymer as a reactive polymeric compatibilizer in a blend of 50:50 Thermoplastic Polyurethane (TPU)-Polydimethylsiloxane (PDMS) rubber has been studied. The compatibility was proved by mechanical property measurements and phase morphology studies. EMA reacted with PDMS rubber at 180 degrees C at 100 rpm rotor speed during melt mixing to produce EMA-g-PDMS rubber in situ, which acted as the compatibilizer for the binary system of TPU and PDMS rubber. EMA-g-PDMS rubber is believed to undergo specific interaction via hydrogen bonding with the TPU matrix through the C=O group of EMA and the unassociated -NH- group of TPU, whereas the PDMS rubber in the EMA-g-PDMS disperses well with the bulk PDMS matrix. The phase morphology studies showed a drastic reduction in the size of the dispersed phase at the optimum concentration of EMA.