The morphology of composite thin films consisting of a conjugated polymer (poly[2-methoxy-5-(3‘,7‘-dimethyloctyloxy)-1,4-phenylenevinylene], MDMO-PPV) and methanofullerene ([6,6]-phenyl C61 butyric acid methyl ester, PCBM), which are used as the active layer in polymer photovoltaic devices, has been extensively studied using transmission electron microscopy (TEM) and selected-area electron diffraction (SAED). Composite MDMO-PPV:PCBM films have been prepared with PCBM concentrations varying from 20 to 90 wt %. PCBM-rich clusters are clearly observed in TEM bright-field mode when the PCBM concentration is increased to ca. 75 wt % in the composite film. The SAED analysis shows that these clusters consist of many PCBM nanocrystals with random crystallographic orientations. Furthermore, we show that these nanocrystals are also present in the homogeneous matrix at PCBM concentrations below 75 wt %. Annealing of the blend films has been performed at temperatures between 60 and 130 °C for different times. In all cases, but especially when the annealing temperature is above the glass transition temperature of MDMO-PPV (80 °C), PCBM molecules show high diffusion mobility, resulting in accelerated phase segregation and in the formation of large PCBM single crystals in the film. The observed phase segregation, even at temperatures as low as 60 °C, indicates that the thermal stability of MDMO-PPV:PCBM films will likely limit the long-term performance of solar cells based on these materials.