A technology has been developed to produce biaxially oriented films of blends of polybutylene terephthalate (PBT) and polyethylene terephthalate (PET) using double bubble tubular film extrusion. The mechanical instabilities and the mechanisms associated with their sources of occurrence are described. Bubble stability varies substantially with deformation and composition. The Rims have been structurally characterized with wide angle X-ray diffraction and optical techniques. The individual phases in the blends oriented differently. We have proposed a model of crystalline morphology in biaxially oriented PBT/PET blend films. The structure of the film is related to processing conditions.