The anhydride/hydroxyl-functionalized blends of styrene-maleic anhydride (SMAH) with poly(tetramethylene ether glycol) (PTMEG) in the presence or absence of a hydrated zinc acetate catalyst were produced in a batch mixer and in a corotating twin-screw extruder. In batch mixing, torque values increased with time as a result of chain-extension/branching reactions. The reaction products were studied by thermal, mechanical, morphological, and spectroscopic characterization techniques. The glass transition temperature of SMAH was lowered by the addition of PTMEG into the system. Major morphological changes were observed at the initial stages of extrusion. The changes in the screw speed influenced the mechanical properties and morphology of the blends. SMAH/PTMEG blends were brittle due to the glassy nature of SHAH. FTIR analysis of the SMAH/PTMEG system showed carboxylic acid and ester formation in the extrusion experiments. Mechanical property data and FTIR spectra indicated that at 150 rpm chain-extension/branching reactions were maximized due to ester formation. However, at 220 rpm, a lower extent of ester formation was observed due to the lower residence time in the extruder.