Polypropylene (PP) and wood fiber (WF) composites (PP/WF) were compatibilized by maleic anhydride grafted Styrene-Ethylene-Butylene-Styrene (MAH-g-SEBS). The blending was performed on a twin-screw extrusion, followed by an injection molding. The torque rheology, dynamic mechanical analysis (DMA), thermal analysis (DSC), mechanical properties, as well as the morphology of the composites, were investigated and discussed. Rheology and DMA results showed that MAH-g-SEBS is an effective compatibilizer for PP/WF composites. Increased torque implied that the composites probably have a great frictional shear force, resulting from strong adhesion at the interface between the matrix and the dispersion phase. The mechanical test indicated that the tensile strength, tensile elongation and the flexural strength of the composites were improved with the increase of the content of MAH-g-SEBS; property enhancement is attributed to improved wetting and interactions between the PP matrix and WF, which is supported by scanning electron microscopy (SEM) analysis.