Polypropylene (PP)/maleic anhydride grafted poly(styrene-b-ethylene-co-butylene-b-styrene) triblock copolymer (SEBS-g-MA)/halloysite nanotube (HNT) ternary nanocomposites were prepared by two methods: onestep simultaneous melt mixing (SM) of all components; and masterbatch-based melt mixing (MB) involving revolution/rotation-type high shear mixing of a concentrated solution of HNT and SEBS-g-MA, followed by melt blending with PP. Organically modified HNTs (Org-HNTs) with cetyltrimethyl ammonium bromide were prepared via a special cryoscopic expansion/modification technique (C-XP/M). The morphological structures and mechanical properties of the composites, as well as the amount of reinforcer/toughener-compatibilizer (HNT/SEBS-g-MA) at a ratio of 1/3, were discussed as a function of SM and MB techniques. Morphological studies showed that the SM technique revealed microcomposite structures with large aggregates of Org-HNTs in the matrix. In contrast, the MB technique, with the help of elastomeric phase encapsulation, resulted in the best HNT dispersion in the PP matrix, leading to improved mechanical properties. In particular, the PP-based ternary nanocomposite with 3 wt % Org-HNT and 9 wt % SEBS-g-MA prepared by the MB method exhibited 200% higher impact strength compared with PP, attributed to well dispersed, encapsulated, and compatibilized HNTs in the matrix, which created a good balance between stiffness and toughness. POLYM. COMPOS., 00:000-000,