The influence of blend composition on phase morphology, rheological, and mechanical properties of polypropylene/poly(ethylene-co-octene) blends was studied. Phase morphology of the blends in the whole range of composition was examined using scanning electron microscope. The rheological data were analyzed to yield the variations of rheological properties and insight into the microstructure of PP/POE blends. The finite element code ANSYS was used for the analysis of the interfacial stress and its distribution between dispersed phase and matrix phase.