The effect of adding diblock copolymer poly(styrene-b-4-vinylpyridine) (P(S-b-4VPy), to immiscible blends of syndiotactic polystyrene (sPS)/thermoplastic polyurethane (TPU) on the morphology, thermal transition, crystalline structure, and rheological and mechanical properties of the blends has been investigated. The diblock copolymer was synthesized by sequential anionic copolymerization and was melt-blended with sPS and TPU. Scanning electron microscopy (SEM) showed that the added block copolymer reduced the domain size of the dispersed phase in the blends. Differential scanning calorimetry (DSC) and wide-angle X-ray diffraction (WAXD) revealed that the extent of compatibility between sPS and TPU affected the crystallization of the sPS in the blends. Tensile strength and elongation at break increased, while the dynamic modulus and complex viscosity decreased with the amount of P(S-b-4VPy) in the blend. The compatibilizing effect of the diblock copolymer is the result of its location at the interface between the sPS and the TPU phases and penetration of the blocks into the: corresponding phases, i.e. the polystyrene block enters the noncrystalline regions of the sPS, and the poly(4-vinylpyridine) block interacts with TPU through intermolecular hydrogen bonding.