Melt blends of thermoplastic polyurethane (TPU) and Poly(styrene-co-acrylonitrile), (SAN) of various compositions were prepared using a two-roll mill. Two blends of composition 70:30 and 50:50 TPU/SAN were selected for compatibility studies. The compatibility effect of SMA on these incompatible blends was studied. The morphology and physical properties of blends were investigated using scanning electron microscopy (SEM), differential scanning calorimetry (DSC), Fourier transform infrared spectra (FTIR) and mechanical properties. TPU/SAN/SMA 70:30:5 showed better compatibility than other blend ratios.