Reactive mixing of epoxy resin with polypropylene (PP) and talc were carried out on a co-rotating twin screw extruder. The prepared samples were injection molded to produce the specimens for the measurements of the shrinkage rate. The microstructure of the composites was studied by scanning electron microscope and correlated to the orientation of filler particles and shrinkage behavior. The nano size epoxy resin particles are obvious in SEM images both in the PP matrix and also adhered on the talc powders. The shrinkage measurement revealed that, using epoxy resin in the formulations, leads to a reduction of 14.3% in the shrinkage rates which is isotropic in both flow and transverse directions. The oven aging test at 100 A degrees C showed a significant effect of epoxy resin on increasing the thermal stability of composites. The stabilization effect of epoxy resin was more pronounced at higher epoxy resin content. It is believed that the metallic impurities on the surface of talc powder deactivated by the functional groups of epoxy resin and the degradation reaction rate decreased.