The microstructure and mechanical properties of polymer composites based on polypropylene and wood flour modified with monochloroacetic acid were investigated. Scanning electron microscopy and wide-angle X-ray diffraction were used as methods to probe the composite microstructures, while the tensile test was used to measure the physical strength. The wood flour modification was performed at different levels of monochloroacetic acid, ranging from 0.01 to 1 mol, while the modified wood flour was used as filler for polypropylene at 10, 20 and 30 wt.-%. It was found that increasing the monochloroacetic acid fraction influences the microstructure of the composites and leads to more homogeneous products. The introduction of non-modified wood flour decreases the polypropylene crystallization degree, but it improves after introduction of monochloroacetic acid. Physical-mechanical tests showed positive effects on tensile tests and Charpy notched impact strength. The new composites appear to be promising materials for construction purposes.