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The development of thermoplastic elastomer blends from waste tire powder and two polyolefins, Viz. maleic anhydride grafted polypropylene and LDPE, was studied. The polymer blends were processed using a twin-screw extruder equipped with a well-designed screw configuration. The blends studied contained a dispersed phase of waste rubber powder obtained from waste tire in a thermoplastic matrix. The effect of ultrasonic treatment on the rubber powder was compared. Contrary to our expectation, ultrasonically treated samples gave poor mechanical properties compared to untreated samples. Significant improvement in the mechanical properties was obtained with the addition of maleic anhydride-grafted styrene-ethylene-butylene-styrene (SEBS-g-MA) as a compatibilizer in treated and untreated waste tire powder / polyolefin blends.