Conventionally, the chemically crosslinked shape memory polymer (SMP) blends are hard to recycle due to their network structure. Herein, the environmental SMP blends of olefin block copolymer (OBC), a unique thermoplastic elastomer, and poly(ɛ‐caprolactone) (PCL) were physically crosslinked. Dicumyl peroxide was used as the compatibilizer to improve their miscibility, as evidenced by the reduced dispersed domain size of PCL in the OBC matrix and the increased complex viscosity. The peroxide modified OBC/PCL blend conferred enhanced tensile properties, increased dynamic storage modulus, increased crystallization temperature, and higher recovery stress. The shape memory behaviors of OBC/PCL blends predeformed under two different predeformation temperatures (30 and 65 °C) were investigated. The recovery stress showed respective maximum peak values corresponding to their predeformation temperatures. In addition, the modified blends gave the better shape memory performance at 65 °C. Besides the peroxide modification approach, a precycle training process via prestretching the samples and reducing the mechanical hysteresis was implemented to improve shape memory performance further. This is the first work on the OBC‐based SMP blends to enhance shape memory performance by combining the chemical modification using added peroxide compatibilizer and the process modification using a precycle training process. © 2017 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 2017, 134, 45475.