Two types of modified montmorillonite (MMT) were achieved using octadecylamine as the modifying agent by the methods of dry process and wet route. Polypropylene (PP)/MMT nanocomposites were prepared using the melt mixing technique and employing maleic anhydride-grafted polypropylene (PP-MA) as the compatibilizer. The modification of montmorillonite was characterized by fourier transform infrared spectroscopy (FTIR), X-ray diffraction (XRD), and scanning electron microscope (SEM). The effect of MMT modification and PP-MA on the microstructure and properties of PP/MMT nanocomposites was investigated by SEM, differential scanning calorimeter (DSC), thermogravimetric analysis (TGA), dynamic mechanical analysis (DMA), and polarizing microscopy. The results show that organic montmorillonite modified by wet process (WOMMT) has a large d-spacing increment; whereas montmorillonite modified by dry process (DOMMT) shows little d-spacing increment. Furthermore, the mechanical properties of composites incorporating WOMMT are better than that containing DOMMT. As a third component, the addition of PP-MA benefits the formation of exfoliated structure and the dispersion of MMT in PP matrix, and hence, enhances the physical properties of the nanocomposite. With the presence of PP-MA, the highly dispersed MMT increases the number of spherulite crystals, enhances the melting enthalpy, improves the thermal stability, and induces the desired tiny crazes more effectively. MMT increases the storage modulus (E) and glass-transition temperature (T-g) of PP because of the stiffness of MMT layers, but PP-MA decreases them owing to its high melt flow index, both of which were in favor of improving the physical properties. (c) 2013 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 130: 3952-3960, 2013