Wood flour (WF)-filled composites based on a polypropylene (PP)/recycled polyethylene terephthalate (r-PET) matrix were prepared using two-step extrusion. Maleic anhydride grafted polypropylene (MAPP) was added to improve the compatibility between polymer matrices and WF. The effects of filler and MAPP compatibilization on the water absorption, mechanical properties, and morphological features of PP/r-PET/WF composites were investigated. The addition of MAPP significantly improved mechanical properties such as tensile strength, flexural strength, tensile modulus, and flexural modulus compared with uncompatibilized composites, but decreased elongation at break. Scanning electron microscopic images of fracture surface specimens revealed better interfacial interaction between WF and polymer matrix for MAPP-compatibilized PP/r-PET/WF composites. MAPP-compatibilized PP/r-PET/WF composites also showed reduced water absorption due to improved interfacial bonding, which limited the amount of absorbable water molecules. These results indicated that MAPP acts as an effective compatibilizer in PP/r-PET/WF composites. POLYM. COMPOS., 2015. © 2015 Society of Plastics Engineers