In this article, the dynamic vulcanization process was applied to polypropylene (PP)/Novolac blends compatibilized with maleic anhydride-grafted PP (MAH-g-PP). The influences of dynamic cure, content of MAHg-PP, Novolac, and curing agent on mechanical properties of the PP/Novolac blends were investigated. The results showed that the dynamically cured PP/MAH-g-PP/ Novolac blend had the best mechanical properties among all PP/Novolac blends. The dynamic cure of Novolac improved the modulus and stiffness of the PP/Novolac blends. The addition of MAH-g-PP into dynamically cured PP/Novolac blend further enhanced the mechanical properties. With increasing Novolac content, tensile strength, flexural modulus, and flexural strength increased significantly, while the elongation at break dramatically deceased. Those blends with hexamethylenetetramine (HMTA) as a curing agent had good mechanical properties at HMTA content of 10 wt %. Scanning electron microscopy (SEM) analysis showed that dynamically cured PP/MAH-g-PP/Novolac blends had finer domains than the PP/MAH-g-PP/Novolac blends. Thermogravimetric analysis (TGA) results indicated that the incorporation of Novolac into PP could improve the thermal stability of PP.