We observed that modified polyphenylene ether (PPE) was solubilized in thermoplastic styrenic elastomer (TPS) and that a two-phase lacy structure formed on nanometer scales when the TPS composition was 67 wt % and modified PPE and polystyreneblock-poly(styrene-co-ethylene-co-butylene)-block-polystyrene (S-SEB-S triblock copolymer) were blended. However, the molecular weight of the outer PS block segments M outPS and the content of the outer PS block segments / outPS were <10,000 g/mol and 20 wt %, respectively. The resulting S-SEB-S/modified PPE nano-alloy exhibited both flexibility and flame retardancy, unlike other materials, where a trade-off exists between these two properties; that is, the flame retardancy was excellent when the phosphorus additive was present. This combination of properties might be attributed to the two-phase nanometer-scale structure consisting of flame-retardant styrene/PPE domains and a continuous soft, lacy SEB matrix. The results for polystyrene-block-poly(ethylene-co-butylene)-block-polystyrene (S-EB-S triblock copolymer)/modified PPE blends were presented for comparison. V C 2014 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 2014, 131, 40446.