Supercritical CO2 (SC-CO2), as a green medium, was induced in the traditional way of preparing polypropylene/ethylene-propylene-diene terpolymer (EPDM) thermoplastic olefin (TPO) by dynamic vulcanization using a twin-screw extruder. The morphology observation suggested that the SC-CO2 not only promoted the rubber dispersion, but also facilitated the rubber dynamic vulcanization; therefore, the crosslinked EPDM particles were more densely distributed in the TPOs prepared with SC-CO2, and existed as a stronger viscoelastic phase restricting the mobility of polymer chains, increasing the complex viscosity and storage modulus and promoting the mechanical properties.