Environmental damage promoted trough post‐consumer waste from the wood industry has worried the society, while its inadequate disposal has raised concerns of the scientific community. Environmentally and economically effective alternative is reusing this residue to produce smart composites. Therefore, this work aimed to investigate the performance of polypropylene (PP)/Jatobá Wood Powder (WP) composites compatibilized with ethylene propylene diene monomer rubber‐maleic anhydride (EPDM‐MA). The effect of distinct melt flow index (MFI) (PP H103 and PP H503) was also investigated. The composites were characterized using differential scanning calorimetry, thermogravimetry, mechanical properties (tensile, flexural, impact, and Shore D hardness), heat deflection temperature, Vicat softening temperature, water absorption and scanning electron microscopy (SEM). Addition of EPDM‐MA, increased impact strength. The best performance was observed for the composition with 10% EPDM‐MA and PP with lower MFI (PP H503). EPDM‐MA also decreased the water absorption for both PP, most due to the chemical interactions among composite phases. SEM images suggest encapsulation of wood particles by EPDM‐MA, promoting better composites performance. Reported results are valuable for the recycling industry, as well as are economically and environmentally promising.