A process for producing expanded pellets from a thermoplastic elastomer having an elongation at break of more than 100% measured to DIN EN ISO 527-2, comprising: (a) pressing a polymer melt comprising a blowing agent through a perforated disk (18) controlled to a temperature between 150° C. and 280° C. and into a pelletizing chamber (26), (b) using a cutting device (20) to comminute the polymer melt pressed through the perforated disk (18) into individual expanding pellets, (c) discharging the pellets from the pelletizing chamber (26) using a liquid stream (36), wherein the blowing agent comprises CO2 and/or N2 and the amount of blowing agent in the polymer melt is from 0.5 to 2.5 wt %, the pelletizing chamber (26) is traversed by a stream of liquid at a temperature between 5° C. and 90° C. and the pressure of 0.1 bar to 20 bar above ambient pressure such that the pellets are expanded in the pressurized liquid by the blowing agent, producing expanded pellets having an uninterrupted skin.