Viscoelastic phase separation (VPS) is a fundamental physical phenomenon that creates percolated network structure in dynamically asymmetric mixtures. The object of this study was to investigate the effect of rod shape nanoparticles with different surface chemistries on VPS in the polystyrene/poly(vinyl methyl ether), PS/PVME, blend. For this purpose, hydrophilic (CNWs) and hydrophobic (M‐CNWs) cellulose nanowhiskers (CNWs) were prepared to be used as nanorods. Rheological measurments were employed to investigate the effect of nanowhiskers on phase separation temperature, kinetics of phase separation, and dynamic asymmetry. The evolution of morphology during the phase separation at a fixed quench depth was assessed using polarized optical microscopy. The nanowhiskers were effective in decreasing the correlation length, which slowed down the phase separation. CNWs self‐assembled into the PVME‐rich phase during the phase separation, which led to a decrease in the dynamic asymmetry and beyond a critical volume fraction of CNWs, the VPS mechanism changed to spinodal decomposition (SD). However, in the presence of M‐CNW, the localization of M‐CNWs into the PS‐rich phase enhanced the dynamic asymmetry and at 2 vol% M‐CNWs, the induced PS‐rich network by VPS was arrested. The linear and non‐linear viscoelastic behavior of the samples were studied as well. POLYM. ENG. SCI., 58:928–942, 2018. © 2017 Society of Plastics Engineers