Unvulcanized and dynamically vulcanized blends of isotactic polypropylene (PP) and butadiene styrene block copolymer (SBS) in the composition range of 10-40 wt % SBS were prepared by melt mixing in an internal mixer and evaluated for impact and tensile properties. Dynamic vulcanization of blends gave superior mechanical properties. Systematic changes with varying blend composition were found in stress-strain behavior in both the blend systems. The effect of blend composition on the state of dispersion and morphology of the dispersed phase droplets were studied by scanning electron microscopy. Analysis of the yield stress data in terms of various theoretical models revealed the variation of stress concentration effect with blend composition and higher interphase adhesion in dynamically vulcanized blends.