Natural fiber thermoplastic composites have become prevalent not only for environmental issues, but also for economic reasons, recyclability, ease of processing etc. A very promising application is in the automotive industry, which is increasingly pressured to produce lighter, cheaper and less polluting vehicles. The main problem of these composites is that they are generally not much impact resistant. To overcome this problem plasticizers may be used, which increase flexibility as well as improve processing. In this investigation the effect of a paraffinic and a vegetable plasticizer on the mechanical and thermal properties of sawdust reinforced toughened polypropylene (PP/EPDM/talc) was studied, employing two different methods of plasticizer incorporation. The first method is based on pre-mixing all components in a tumble mixer, extrusion in a co-rotational twin-screw extruder and injection molding. In the second method the plasticizer was added in the injection molding hopper, after extrusion of the other components. The addition of 10 wt% paraffinic plasticizer increased impact strength of the plasticizer-free composite by almost 50% for both incorporation methods, while the increase generated by the addition of 10 wt% vegetable plasticizer was only 31%. The compounds containing 10 wt% paraffinic plasticizer presented tensile and flexural strength, slightly higher than that presented by the compounds containing 10 wt% vegetable plasticizer. A significant conclusion of this study is when comparing the responses regarding the plasticizer incorporation methods. There was practically no difference in the investigated properties, either mechanical or thermal, when the plasticizer was added in the extrusion or injection stage, which means one step less in the processing of the composite.