This study investigated a method to modify cellulose for enhanced hydrophobicity through gas-phase grafting with palmitoyl chloride, facilitating easier blending of fibers and polypropylene. In addition, cellulose sheets were produced by substituting water in the cellulose fiber stock with ethanol during sheet molding to prevent the matting of macrofibrils on the cellulose surface, thereby improving the hydrophobization efficiency achieved by gas grafting. The results revealed that alcohol-molded sheets, which expanded in volume, exhibited more than twice the amount of reacted fatty acids compared to conventional water-based cellulose sheets after gas grafting. Composite films composed of the pretreated fibers exhibited superior tensile strength relative to those made from non-grafted fibers. In particular, the addition of maleic-anhydride-grafted polypropylene (MAPP) improved the dispersibility of the cellulose fibers within the composite film, indicating the positive contribution of gas grafting and MAPP treatment.