In this study, the effects of material optimization and compounding processes on the properties of natural fiber composites were studied. The thermal stabilities of sisal fiber and jute fiber were compared by thermogravimetric analysis. The influences of fiber content, coupling agent, fiber geometry, and fiber distribution on the properties were also researched. It was observed that sisal fiber had more thermal stability than jute fiber. Addition of coupling agent, long fiber length, and uniform fiber distribution led to higher performance composites. For the sisal fiber-reinforced polypropylene composites, the critical fiber length was 2.27 mm and the interfacial shear strength was 22.03 MPa with MAPP. The tensile strength of composites was also theoretically predicted based on Kelly Tyson model.