In this research, reactive blending of thermoplastic polyurethane (TPU) and polypropylene (PP) was studied. Grafting of maleic anhydride (MAH) onto TPU/PP blends was performed by a twin-screw extruder in the presence of dicumyl peroxide (DCP). Mechanical properties and morphology of the blends were investigated by tensile testing and scanning electron microscopy (SEM), respectively. Thermal properties of the blends were characterized by differential scanning calorimetry (DSC) and thermogravimetric analysis (TGA). The obtained results were compared with those of the uncompatibilized blends and the blends compatibilized with a commercial maleic anhydride grafted polypropylene (PP-g-MA). The results from the uncompatibilized blends clearly indicate that the TPU and PP are immiscible resulting in undesirable properties of the blends. These properties were improved significantly when TPU and PP were reactive-blended in the presence of MAH and DCP. When comparing with the blends compatibilized with PP-g-MA, the blends prepared by the reactive blending technique possessed better mechanical properties.