Transmission electron microscopy and electron diffraction are used to study the changes in morphology of composite films of poly(3-hexylthiophene) (P3HT) and a methanofullerene derivative (PCBM) in bulk heterojunction solar cells. Thermal annealing produces and stabilizes a nanoscale interpenetrating network with crystalline order for both components. P3HT forms long, thin conducting nanowires in a rather homogenous, nanoscrystalline PCBM film. Both the improved crystalline nature of films and increasing but controlled demixing between the two constitutes therein after annealing explains the considerable increase of the power conversion efficiency observed in these devices