Thermoplastic elastomer composites and nanocomposites were fabricated via melt processing technique by blending thermoplastic elastomer (TPEE) with poly(butylene terephthalate) (PBT) thermoplastic and also by adding small amount of organo modified nanoclay and/or polytetrafluoroethylene (PTFE). We study the effect of polymer blending on the mechanical and thermal properties of TPEE blends with and without nanoparticle additions. Significant improvement was observed by blending only TPEE and virgin PBT polymers. With a small amount (0.5 wt.%) of nanoclay or PTFE particles added to the TPEE composite, there was further improvement in both the mechanical and thermal properties. To study mechanical properties, flexural strength (FS), flexural modulus (FM), tensile strength (TS), and tensile elongation (TE) were all investigated. Thermogravimetric analysis (TGA) and differential scanning calorimetry (DSC) were used to analyze the thermal properties, including the heat distortion temperature (HDT), of the composites. Scanning electron microscopy (SEM) was used to observe the polymer fracture surface morphology. The dispersion of the clay and PTFE nanoparticles was confirmed by transmission electron microscopy (TEM) analysis. This material is proposed for use as a baffle plate in the automotive industry, where both high HDT and high modulus are essential.