The effects of different polypropylene (PP)-g-maleic anhydride polymers, used as compatibilizers, on the degree of exfoliation and co-continuity of PP/ethylene-propylene-diene terpolymer (EPDM) thermoplastic elastomer (TPE)/clay nanocomposites were investigated. X-ray diffraction and transmission electron microscopic micrographs showed that nanocomposites ranged from intercalated structure to a coexistence of intercalated tactoids and exfoliated layers. The observed significant increase in crystallization temperature (similar to 20 degrees C) could be beneficial for molding applications, because it means faster solidification and shorter cycle time. The rheological characteristic relaxation time of the compatibilizer correlated with the dispersion level in the nanocomposites. Solvent extraction and gravimetry measurements of continuity showed that compatibilizer affects the co-continuity composition range through its effect on the dispersion level of nanoclays. At high EPDM concentration, the continuity of the thermoplastic phase for semi-exfoliated TPE nanocomposites was higher than in the corresponding TPEs. Considering that TPE formation is the first step for thermoplastic vulcanizate production, where the thermoplastic phase should have a certain level of continuity, these results suggest that higher levels of EPDM could be incorporated into the semi-exfoliated system before losing matrix continuity. It was also observed that there is a direct relation between the magnitude of the normalized stress growth viscosity overshoot and the continuity of TPE nanocomposites. POLYM. ENG. SCI., 50:2131-2142,2010. (C) 2010 Society of Plastics Engineers