Thin films of polymer blends are molded into strips for investigating the influence of lateral confinement on phase separation. The strip has a width and thickness of 17 mu m and 1.0 mu m, respectively, and contains a 50/50 blend of poly(methyl methacrylate) (PMMA) and poly(styrene-ran-acrylonitrile) (SAN). Upon annealing, the strip profile rapidly becomes bell-shaped, forming a contact angle of 3 degrees with the substrate. The dynamics of phase separation is investigated using confocal microscopy and atomic force microscopy. The early stage is characterized by an interconnected morphology and symmetric wetting of the PMMA-rich phase at the substrate and surface. The PMMA-rich domains grow from the surface toward the substrate during the early intermediate stage and eventually connect with the wetting layer covering the substrate to begin the late intermediate stage. The domain diameter increases rapidly (early), slows down (intermediate), and then decreases(late) during phase separation. During the late stage the PMMA-rich domains heal,leaving behind an elliptical SAN-rich core encapsulated by PMMA-rich wetting layers. These studies demonstrate, that confinement directs the formation of a self-assembled core/shell morphology, which has potential applications for encapsulating drugs or creating microwires.