To clarify the deformation mechanisms and to improve the mechanical properties of dynamic vulcanizates, we studied their deformation behavior by Fourier-transform infrared (FTIR) spectroscopy. It was found that the orientation in the dispersed phase (EPDM phase) is higher than in the matrix (PP phase) upon loading. The orientation of the rubber phase increases continuously. In the thermoplastic phase, a change of the deformation mechanism takes place. With respect to the total strain of the material, the orientation in the thermoplastic phase of the dynamic vulcanizates is lower, and in the elastic phase, it is higher than the corresponding orientation of the pure components. During stress relaxation, there is an increase of the orientation in the crystalline PP phase. Simultaneously, a decrease of the orientation in the EPDM phase is observed. Upon unloading, the orientation recovery in the EPDM phase is always complete, while the orientation recovery in the PP phase is reversible only at low strains. The critical point, where the elastic deformation gets lost, corresponds to the minimum in the orientation function curve.