We use spectroscopic ellipsometry to study the evolution of structure and optoelectronic properties of poly(3-hexylthiophene) (P3HT) and [6,6]-phenyl C61-butyric acid methyl ester (PCBM) photovoltaic thin film blends upon thermal annealing. Four distinct processes are identified: the evaporation of residual solvent above the glass transition temperature of the blend, the relaxation of non-equilibrium molecular conformation formed through spin-casting, the crystallization of both P3HT and PCBM components, and the phase separation of the P3HT and PCBM domains. Devices annealed at 150 °C for between 10 and 60 min exhibit an average power conversion efficiency of around 4.0%. We find that the rate at which the P3HT/PCBM is returned to room temperature is more important in determining device efficiency than the duration of the isothermal annealing process. We conclude that the rapid quenching of a film from the annealing temperature to room temperature hampers the crystallization of the P3HT and can trap non-equilibrium morphological states. Such states apparently impact on device short circuit current, fill factor and, thus, operational efficiency.