Thermoplastic elastomers (TPEs) are block copolymers made up of "hard" (glassy or crystalline) and "soft" (rubbery) blocks that self-organize into "domain" structures at a length scale of a few tens of nanometers. Under typical processing conditions, TPEs also develop a "polydomain" structure at the micron level that is similar to that of metal polycrystals. Therefore, from a continuum point of view, TPEs may be regarded as materials with heterogeneities at two different length scales. In this work, we propose a constitutive model for highly oriented, near-single-crystal TPEs with lamellar domain morphology. Based on small-angle X-ray scattering (SAXS) and transmission electron microscopy (TEM) observations, we consider such materials to have a granular microstructure where the grains are made up of the same, perfect, lamellar structure (single crystal) with slightly different lamination directions (crystal orientations). Having identified the underlying morphology, the overall finite-deformation response of these materials is determined by means of a two-scale homogenization procedure. Interestingly, the model predictions indicate that the evolution of microstructure-especially the rotation of the layers-has a very significant, but subtle effect on the overall properties of near-single-crystal TPEs. In particular, for certain loading conditions-namely, for those with sufficiently large compressive deformations applied in the direction of the lamellae within the individual grains-the model becomes macroscopically unstable (i.e., it loses strong ellipticity). By keeping track of the evolution of the underlying microstructure, we find that such instabilities can be related to the development of "chevron" patterns. © 2008 Elsevier Ltd. All rights reserved.