A series of 50:50 polycarbonate–poly(butylene terephthalate) (PC-PBT) blends were formed via reactive melt blending in a torque rheometer. A controlled degree of transesterification between the two homopolymers was initiated by the incorporation of an alkyl titanium catalyst during melt blending and finally quenched by the addition of a transesterification inhibitor. The resultant materials were characterized using differential scanning calorimetry (DSC), dynamic mechanical thermal analysis (DMTA), Fourier transform infrared (FTIR) spectroscopy, scanning electron microscopy (SEM), and transmission electron microscopy (TEM). As the degree of transesterification increased, the composition of the blends became increasingly complex, comprising mixtures of the homopolymers and variousAB-type copolymers of PC and PBT, resulting in significant changes in their thermal behavior. A corresponding transformation in the morphology of the blends was observed due to the formation of increasing concentrations of copolyesters. Thus, the initial coarse (>5 μm) bicontinuous morphology developed into a more finely dispersed submicron-scale structure, exhibited by blends containing significant volumes of interphase material; finally, at high degrees of transesterification, a homogeneous, amorphous material was formed.