Heterophasic copolymers comprised of polypropylene (PP) matrix and ethylene-propylene copolymer (EPC) dispersed phase were investigated with respect to the dispersed phase composition, i.e., ethylene/propylene ratio. The rheological properties, morphology, as well as thermal and mechanical relaxation behavior were studied to describe the structure evolution and phase interactions between the components of the PP copolymers. Decrease of the ethylene content of the EPC leads to a higher matrix-dispersed phase compatibility, as evaluated by the shift of the glass transition temperatures of EPC and PP towards each other. At ethylene content of EPC of 17 wt %, the glass transition temperatures of the both phases merged into a joint relaxation. The effect of the EPC composition on the internal structure of the dispersed domains and on the morphology development of the heterophasic copolymers was demonstrated. Decreasing ethylene content was found to induce a refinement of the dispersed phase with several orders of magnitude down to 0.18 m for propylene-rich EPC. Optical microscopy observations showed that the dispersed propylene-rich phase is preferably rejected at the interlamellar regions of the spherulites and/or at the interspherulitic regions, while the ethylene-rich domains are engulfed within the PP spherulites. Both of these processes impose an additional energetic barrier and influence the spherulite growth rate of the heterophasic materials.