The miscibility and the shape memory effect of PVC blends with segmented thermoplastic polyurethanes (TPUs), synthesized from diol-terminated polycaprolactone (PCL), hexamethylene diisocyanate, 4,4'-dihydroxy biphenyl, were studied. PVC was miscible with PCL segment in TPU and the glass transition temperature of this miscible amorphous domain varied smoothly with composition. When PVC was blended with TPU by the weight ratio of 8/2, the hysterisis in repeated cyclic tensile test was reduced compared with PVC. However, in 6/4 blends, unrecoverable permanent deformation was increased compared with PVC. Dynamic mechanical properties were examined to explain these results.