A new quantitative thermodynamic model for the prediction of phase equilibrium behaviour of thermoset-reactive modifier polymer blends has been developed. The model combines the Flory–Huggins lattice theory with a group contribution theory for the prediction of the thermodynamics evolution. The model predicts the free energy of mixing as a function of blend composition, temperature, and degree of polymerisation. The evolution during polymerisation of both the entropy and enthalpy of mixing has been taken into account. Moreover, the reactions of both the thermoset and the modifier have been considered in the model. The model successfully interprets the trends observed in chemically induced phase separation (CIPS). Binodal and spinodal lines are calculated and the window available for phase separation is predicted. The model was evaluated using a diglycidyl ether bisphenol-A epoxy cured with isophorone diamine, blended with epoxy functionalised dendritic hyperbranched polymers (HBP). This system underwent chemically induced phase separation during cure as revealed by cloud point measurements. Excellent agreement was obtained between the model and the experimental data when entropy and enthalpy variations associated with both the thermoset and the modifier cure were taken into account.