A detailed study on the thermal transition of poly(3-hexylthiophene) (P3HT) and blends was investigated by differential scanning calorimetry, while the morphological, phase separation and the transformation in the optical properties were probed by thermal-atomic force microscopy (AFM), polarized optical microscopy (POM) and spectroscopic ellipsometry (SE). The inclusion of fullerenes on the polymer structure confirms the formation and evolution of a new endothermic transition at high temperatures. SE revealed that the refractive index and extinction coefficient of the films increased with annealing temperature up to 140 degrees C due to the suppressed diffusion of PCBM molecules into the blend. Annealing above 140 degrees C resulted in a decrease in the optical constants due to the formation of large "needle-like" crystals. This is due to the depletion of PCBM clusters near the "needle-like" structures; resulting from the diffusion of the PCBM molecules into the growing PCBM crystals or "needle-like" crystals as is evidenced by in situ thermal-AFM and POM. These findings indicate that annealing temperature of 140 degrees C is suitable for a P3HT:PCBM film to obtain the desired phase separation for solar cell application.