The effects of poly(ethylene glycol) (PEG)/montmorillonite (MMT) hybrids on the phase morphology, rheological behaviors and mechanical properties of polypropylene (PP) were investigated. The analysis of transmission electron microscopy (TEM) and wide-angle X-ray diffraction (WAXD) indicated that the PEG modified montmorillonite was intercalated and well dispersed into PP matrix. It was found that the addition of the PEG/MMT hybrids in PP matrix lead to a significant reduction of melt viscosity and enhancement in izod-notched impact strength and elongation at break, except that the tensile strength was without much obvious change. A quantitative analysis indicated that MMT was intercalated by PEG, which was responsible for the melt viscosity reduction of PP matrix. Differential scanning calorimetry (DSC) analysis indicated that the addition of PEG/MMT hybrids induced the formation of beta-crystal of PP. Polarized light micrographs (PLM) analysis indicated that the dispersed MMT, which acted as a nucleating agent, lowered the spherulite dimension and increased the spherulite number, resulting in high izod-notched impact strength and elongation at break.