Ternary composites of polypropylene (PP), polydimethylsiloxane (PDMS) elastomer, and nano-SiO2, prepared with three different mixing sequences, were studied for dispersion morphology and its effect on the crystallization of PP and the mechanical properties. The mixing sequence produced a significant effect on the dispersion morphology and, thereby, on the mechanical properties of the composites. A two-step mixing sequence, in which nano-SiO2 was added in the second step to the PP/PDMS binary system, produced a significant encapsulation of nano-SiO2 by PDMS, and this, in turn, resulted in the poor modulus and impact strength of the composite. A one-step mixing sequence of all three components produced a separated dispersion of PDMS and nano-SiO2 phases in the PP matrix with the occurrence of a fine band of nano-SiO2 particles at the boundaries of the PDMS domains and the presence of some nano-SiO2 filler particles inside the PDMS domains. This one-step mixing sequence produced an improvement in the tensile modulus but a decrease in the impact strength with increasing nano-SiO2 content. In the third sequence of mixing, which involved a two-step mixing sequence through the addition of PDMS in the second step to the previously prepared PP/nano-SiO2 binary system, the morphology of the dispersion showed separately dispersed PDMS and nano-SiO2 phases with a loose network of nano-SiO2 particles surrounding the PDMS domains. This latter series of ternary composites had the highest impact strength and exhibited high shear deformation under tensile and impact conditions. (C) 2008 Wiley Periodicals, Inc.