The structure development and mechanical properties of polypropylene (PP) composite containing polyethylene terephthalate (PET) fibres were studied both in the presence and absence of a compatibilizer such as maleic anhydride (MA). The structural and morphological studies were carried out by WAXD, optical microscopy and SEM techniques. In the absence of MA, the PET fibres in PP showed transcrystalline morphology and thus proved to be a strong nucleating agent for PP spherulites. On the other hand, in the presence of MA, no transcrystalline growth of PP was observed on the surface of PET fibres. The fibre to matrix bonding was better in presence of MA than without it, as was revealed by SEM of fractured surfaces. The mechanical properties viz. impact strength and tensile modulus showed enhancement for these composites as compared to pure PP. However, pronounced increase in the properties was seen for PET fibres filled PP composite without MA. The above findings could be understood in terms of high aspect ratio for PET fibres, transcrystalline morphology, good fibre-matrix adhesion and nucleating ability of PET fibres in PP matrix. © 2001 Elsevier Science Ltd.