AbstractThe theory of phase separation and microdomain formation in block copolymer‐homopolymer blends is reviewed. The calculations involve the solution of modified mean field diffusion equations for the polymer distribution functions, which are used to construct a general free energy expression, taking into account the connectedness of the blocks of the copolymer, and including changes in the conformational entropy in interphase regions, stretching of the polymer chains, enthalpic interaction terms between different chemical species, and configurational entropy terms. The effect of solid surfaces on grafted polymers is also included in the theory. As examples we discuss pure block copolymers, the use of block copolymers as surfactants in mixtures of incompatible homopolymers, and the structure of block copolymer micelles in a homopolymer matrix. A few interesting features of the equilibrium phase diagrams of blends are pointed out, and we give a preview of current theoretical work on crystalline‐amorphous block copolymers.