In situ microfibrillar reinforced composite (MFC) fabrication is a new and efficient approach to recycle two thermoplastic polymeric components that are very different in their melting points. Among thermoplastic matrices, polypropylene (PP), one of the most widely used polymeric materials, has received a great amount of industrial attention due to its superior mechanical properties, as compared with other polyolefins. Poly (ethylene terephthalate) (PET) is a suitable reinforcing component for polyolefinic matrices, because it is an engineering plastic with good mechanical properties. Due to the great difference in the melting points of PP and PET, it is possible to fabricate MFCs from these two polymers. Also, due to excellent Young's modulus of clay nanoparticles, they have a good potential to enhance the mechanical properties of the composites. Compatibilizers can also improve the mechanical properties of the final composite by reducing the interfacial tension and increasing the adhesion between the composite parts. In this study, two types of masterbatch were prepared in an internal mixer from C30B, which is a modified nanoclay. While there was no compatibilizer in the second masterbatch and clay nanoparticles were added directly to the PET phase at 250 , in the first one, clay nanoparticles were added to the PP phase at 180 in the presence of PP-g-GMA as a compatibilizer. Then, the final extruded blends with 25wt% PET and different amounts of 1, 3 and 5 phr of C30B were prepared through melt extrusion in a single screw extruder; this was followed by continuous drawing with three different drawing ratios of 3, 5 and 8. At last, the final composites were fabricated by compression molding at 190 . Tensile test results confirmed that, due to the presence of the compatibilizer and the enhanced adhesion in the interfacial phase, samples containing the first type of masterbatch had higher tensile strength and modulus, as compared with those containing the second type of masterbatch. In the presence and absence of the compatibilizer, the tensile modulus was enhanced with increasing the amount of C30B in the composite. It was also observed that by adding C30B to a certain amount, tensile strength was enhanced and then increased in C30B amounts, leading to tensile strength decrement. The SEM micrographs from the fractured surface of samples showed the increase of the drawing ratio and the decrease of C30B amount, resulting in the reduction of microfibril's diameter and the increase in the aspect ratio of microfibrils. Impact test result also indicated that the impact strength of all samples was lower than that of the pure PP. By adding the compatibilizer to the samples, due to the increased adhesion between the matrix and microfibrils, the main fracture mechanism was the fracture of microfibrils, a confirmed by providing SEM micrographs of the fractured surface of the composites. In this research, some micromechanical models were used to evaluate the composite Young's modulus and among them, Pan's equations were found to have the best predictions. Key words : In situ microfibrillar reinforced composite (MFC), Polypropylene, Poly (ethylene terephthalate),