The problem of recycling co‐mingled plastics is primarily related to the problem of multiple interfaces in multicomponent immiscible polymer blends. Here, we study a new concept where thermodynamically driven polymer segregation and phase encapsulation are used to locate multiple phases within one of two major phases. Starting from a co‐continuous blend of HDPE and PP, hierarchically encapsulated PS/PMMA/PC composite droplets are found to be exclusively located within PP when the principal HDPE/PP interface is compatibilized. The mechanical properties of the structures demonstrate an improved tensile strength and modulus as well as ductility under the appropriate processing conditions. This approach has potential as a novel route toward the recycling of co‐mingled plastics.