This study investigate the influenece of water (or steam) in melt-mixing process by fully-intermeshing co-rotating twin screw extruder and characterizes rheological, mechnical and thermal properties. Polypropylene and pristine montmorillonite was melt blended in twin screw extruder (TSE) designed to allow water injection. By controlling the amount of the water, the exfoliation or intercalated were achieve in TSE. Although the polypropylene was one of the most hydrophobic polymers which reduced compatibility with clay, the main focus of this experiment is effect of water on clay. Next, the compatibility between polypropylene and clay will be researched.