The effect of the maleic anhydride grafted styrene-ethylene/butylene-styrene (SEBS-g-MA) block copolymer on the properties of thermoplastic polyurethane (TPU) and polypropylene (PP) blends were studied. TPU/PP and TPU/PP/SEBS-g-MA blends with different weight ratios were prepared in a twin-screw extruder. The thermal properties of the blends were investigated via differential scanning calorimetry (DSC) and thermogravimetric analysis (TGA). The morphological structure of the blends as well as the effect of SEBS-g-MA block copolymer on the reduction of domain size and particle dispersion were investigated via scanning electron microscopy (SEM). The results from the uncompatibilized blends clearly indicated immiscibility of TPU and PP resulting in undesirable properties. The thermal properties of TPU/PP blends were improved by compatibilization with SEBS-g-MA. Addition of the SEBS-g-MA block copolymer resulted in a finer dispersion of the minor phase and clearly improved interfacial adhesion.