In this article, dynamic reaction of waste ground rubber tire powder/PP blends with compatibilizers is extended to commercially available waste rubber Viz. Ground rubber tire and PP for the possibility of getting recycled material with good mechanical properties. In the first part of the article it was shown that the compatibility of model material/PP blends has greatly improved. In this article, extensive studies have been carried out to study the effect of compatibilizers, in-situ compatibilization of immiscible waste ground rubber tire (WGRT) powder /polyolefin blends of various concentrations was investigated by means of extrusion process using a co-rotating twin screw extruder. It was observed that addition of small amounts of compatibilizers like SEBS-g-MA to the blends of WGRT and PP-g-MA can result in better mechanical properties than the blends with isotactic PP. The blends of WGRT powder and PP-g-MA with compatibilizer have better adhesion than those of isotactic PP blends as revealed by the morphological studies using AIM and SEM. The betterment in properties can be attributed to the presence of functional group, maleic anhydride in PP-g-MA. (c) 2007 Wiley Periodicals, Inc.