The morphology development, compatibilization, and properties were investigated for polymer blends containing polypropylene (PP) and an engineering polymer. The factors affecting the morphology and its development during melt processing, as well as the methods for improving the compatibility between immiscible polymers, were of great interest. In addition, measures describing the quality of mixing during blending in different types of melt mixing equipment were characterized and evaluated. The engineering polymers that were used were polyamides, thermoplastic polyesters, and thermotropic liquid crystalline polymers (LCP). In addition, PP was modified with polybutylacrylate rubber. The quality of the melt mixing was characterized in terms of mixing intensity (shear stress), special energy input, residence time, residence time distribution, and a statistical mixing intensity function based on that. Weber number analysis (ratio of viscous and interfacial forces) was applied to characterize the mixing and to predict the average particle size of the dispersed phase at equilibrium state. The most important stage affecting the final morphology of a blend was the last melt processing stage. The viscosity ratio under actual processing conditions (temperature, shear rate) was found to be of great importance in the formation of morphology. Optimization of the viscosity ratio was successfully applied in processing of PP/LCP blends. A special processing technique was developed for preparing impact resistant PP/LCP blends. A solid state functionalization method based on impregnation of liquid reactive monomers into solid PP pellets was successfully utilized to improve the properties of elastomeric PP/poly(n-butylacrylate) blend. ii new monomer containing the oxazoline group was used for functionalization of PP by melt free radical grafting, This functionalized PP was then applied as a compatibilizer in PP/PBT blend to obtain an impact resistant material. Moreover, a recently developed method (imbedded fiber retraction) was applied to semi-crystalline polymer pairs (PP/PA and PP/LCP) to characterize the changes in the interfacial properties imparted by the addition of a suitable compatibilizer.