Morphology assessment plays an important role as the ultimate properties of the processed nanocomposites mainly depend upon the morphology. This study focuses on the evaluation of polypropylene/clay nanocomposite structure using rheological and transmission electron microscopic investigation. Melt processing of nanocomposite was carried out on a co-rotating twin screw extruder. Maleic anhydride grafted polypropylene (PP-g-MA) was used as a compatibilizer to facilitate better mixing of clay in polypropylene. The effect of compatibilizer to clay ratio on dispersion was analyzed through rheological data. An increase in complex viscosity and storage modulus with increase in compatibilizer content is observed at lower frequency region. Shifting of crossover frequencies to a lower value also indicate better exfoliation. Improved exfoliated morphology was also corroborated by Cole-Cole and inverse loss tangent plots. Transmission electron microscopy (TEM) micrograph based unique statistical image analysis was carried out using ImageJ software. A compatibilizer to clay content of 2 : 1 was found to be the optimum composition which was further supported by dielectric and mechanical properties. (c) 2013 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 130: 4464-4473, 2013