The mechanical properties of tactic poly(vinyl methyl ether)/polystyrene (PVME/PS) blends are investigated as a route to toughened polymers by using the lower critical solution temperature (LCST) behaviour as a mechanism for the production of rubbery domains. Crystallites in the tactic PVME-rich phase act as physical crosslinks. Shear bands as well as crazes are observed in these in situ composites due to interaction between a PS matrix plasticized with PVME and the PVME-rich rubbery domains.