A series of thermoplastic polymers and their blends were melt-processed with high intensity ultrasonic wave in an intensive mixer. For the effective transfer of ultrasonic energy, an experimental apparatus was specially designed so that polymer melt can directly contact with ultrasonic horn. It was observed that significant variations in the rheological properties of polymers occur due to the unique action of ultrasonic wave without any aid of chemical additives. It was also found that the direct sonication on immiscible polymer blends in melt state reduces the domain sizes considerably and stabilizes the phase morphology of the blends. The degree of compatibilization was strongly affected by viscosity ratio of the components and the morphology was stable after annealing in properly compatibilized blends. It is suggested that ultrasound assisted melt mixing can lead to in-situ copolymer formation between the components and consequently provide an effective route to compatibilize immiscible polymer blends.