Montmorillonite is a promising substitute for aluminum trihydroxide in flame-retardant polypropylene/aluminum trihydroxide (PP/ATH) composites. Study was made of the partial substitution of organoclay for ATH in PP/ATH composites. The total concentration of filler was kept at 30 wt%. The composites were compatibilized with two types of compatibilizer commercial maleic anhydride functionalized polypropylene (PP-g-MA) and hydroxyl-functionalized polypropylene (PP-co-OH) prepared with metallocene catalyst The effect of compatibilization on the morphology was studied by the transmission electron microscopy and the scanning electron microscopy. Mechanical properties were characterized by tensile and impact measurements, and flammability properties with a cone calorimeter. Addition of compatibilizer and stearic acid (SA) treatment of the ATH particles contributed to the dispersion of the fillers. Both compatibilizers produced organoclay with exfoliated structure and improved adhesion between the fillers and the matrix. Toughness improved and decomposition and flammability were reduced.