Blends of bromo-terminated polystyrene (PS-Br) and poly(vinyl methylether) (PVME) exhibit lower critical solution temperatures. In this study, PS-Br was designed by atom transfer radical polymerization and was converted to thiol-capped polystyrene (PS-SH) by reacting with thiourea. The silver nanoparticles (nAg) were then decorated with covalently bound PS-SH macromolecules to improve the phase miscibility in the PS-Br-PVME blends. Thermally induced demixing in this model blend was followed in the presence of polystyrene immobilized silver nanoparticles (PS-g-nAg). The graft density of the PS macromolecules was estimated to be ca. 0.78 chains per nm(2). Although the matrix and the grafted molecular weights were similar, PS-g-nAg particles were expelled from the PS phase and were localized in the PVME phase of the blends. This was addressed with respect to intermediate graft density and favourable PS-PVME contacts from microscopic interactions point of view. Interestingly, blends with 0.5 wt% PS-g-nAg delayed the spinodal decomposition temperature in the blends by ca. 18 °C with respect to the control blends. The scale of cooperativity, as determined by differential scanning calorimetry, increased only marginally in the case of PS-g-nAg; however, it increased significantly in the presence of bare nAg particles.