Abstract The proper morphology of the impact modifier in a polymer blend is important for the modifier to function properly. Well‐dispersed particles of less than 1.0 micron in size are needed. For chlorinated polyethylene (CPE) in rigid PVC, this morphology is developed during normal extrusion conditions. The CPE coats the unmelted PVC primary particles, creating a network‐like structure. Then, since CPE is at a low concentration (<5%), when the PVC melts, phase inversion occurs, giving discrete CPE particles in a continuous matrix of PVC. Further CPE domain breakup then occurs in the blend melt state, resulting in the desired morphology for impact modification.