Wood fiber was modified by impulse-cyclone drying treatment with poplar and montmorillonite as reinforcing materials; mMMT/polypropylene/wood fiber foaming composite was prepared by the hot compression process. The effects of modification, temperature, and content of montmorillonite on physical and mechanical properties of the composite were analyzed. Mechanical properties, porosity, shrinkage, water absorption, and thickness swelling tests showed that when mMMT reinforcement was 5 wt%, the best performance was achieved. The scanning electron microscopy observations showed that bubble holes were distributed widely and evenly, and mMMT appeared in the cell gap and was encapsulated by polypropylene, which maximized the bonding effect. Flexural strength was 27.5 MPa, flexural modulus was 2110 MPa, tensile strength was 20.0 MPa, and impact strength was 6.30 KJ/m2. When absolute volume of dense solid reached 70.8 cm3, porosity was 21.4% and shrinkage was 1.17%, which indicated that the water absorption increased most remarkably under that test condition. When equilibrium water absorption reached 9.28%, the thickness swelling decreased by 25%. The results showed that mMMT effectively optimized mechanical properties of wood-based foamed composites and improved hygroscopic properties.