Most processing/morphology studies of multi-phase polymer blends have been concerned with controlling the size and shape of the dispersed phase. The dispersed phase is generally a pure homo- or copolymer (apart from low levels of interfacial modifier). This paper describes the preparation during melt processing of a complex polymer blend morphology known as a composite dispersed phase system. Microscopically this structure can be seen to be composed of three parts: two distinct phases with sub-inclusions within one of the phases. This system is a type of blend within a blend. Various microscopic techniques are used to show that a composite multi-phase morphology can be prepared in an incompatible polypropylene/ polycarbonate (PP/PC) blend as well as in a compatible polyethylene copolymer/polyamide blend. This structure has been generated at two compositions for polypropylene/ polycarbonate through melt blending. At 50% volume fraction (near the region of dual-phase continuity), simultaneous addition of components results in co-continuous polypropylene and polycarbonate phases with the latter containing small PP spherical sub-inclusions. At 25% PC (volume fraction) the generation of a composite dispersed phase in a polypropylene matrix is obtained by imposing phase inversion followed by controlling the mixing time. The morphology in this case consists of a polypropylene matrix, a polycarbonate dispersed phase and spherical polypropylene sub-inclusions within the dispersed polycarbonate. Partial stabilization of the composite morphology in incompatible blends with mixing time can be obtained through control of the viscosity of the dispersed phase. Polyethylene copolymer/polyamide blends have also been prepared by the phase inversion process and show that strong interfacial interactions between the polyamide sub-inclusions and polyethylene copolymer dispersed phase material results in complete stabilization of the composite dispersed phase morphology with very high retention of sub-inclusions persisting even after long mixing times.