Nanocomposites based on isotactic polypropylene (iPP) and titanium dioxide (TiO2) nanoparticle containing 1–15 vol% (4.6–45.5 wt%) of the nanoparticle were prepared by the melt blending process. The effect of an anhydride‐modified polypropylene as a compatibilizer on dispersion of TiO2 nanoparticles was assessed using SEM. TGA and DSC analysis were performed to study the thermal properties of the nanocomposites. Crystalline structures of iPP in the presence of TiO2 were analyzed by XRD. Mechanical properties of the nanoparticles were measured and a micromechanical analysis was applied to quantify interface interaction between the polymer and particle. SEM results revealed improvement of TiO2 particle dispersion by adding the compatibilizer. It was shown that the thermal stability and crystalline structure of the nanocomposite are significantly affected by the state of particle dispersion. TiO2 nanoparticles were shown to be strong β‐nucleating agents for iPP, especially at concentrations less than 5 vol%. Presence of the β‐structure crystals reduced the elastic modulus and yield strength of the nanocomposites. Micromechanical analysis showed enhanced interaction between organic and inorganic phases of the compatibilized nanocomposites. POLYM. ENG. SCI., 54:874–886, 2014. © 2013 Society of Plastics Engineers