In this study, hydrophobic cellulose nanofibers (CNF) were prepared through surface modification using alkenyl succinic anhydride (ASA) and its hydrophobicity was controlled by changing the degree of substitution (DS) from 0 to 0.4. The modified CNF were blended with isotactic polypropylene (iPP) in a twin-screw extruder and then the nanocomposite foams were prepared using a core-back foam injection molding (FIM) technique with nitrogen (N2) as the physical blowing agent. Fourier transform infrared spectroscopy (FTIR) and X-ray computed tomography results demonstrated that CNF modified with a DS of 0.4 was dispersed uniformly within the PP, while agglomeration was observed in the composites with the DS of 0 and 0.2. Different rheological curves such as complex viscosity and storage modulus highlighted the reinforcing potential of CNF on the viscoelastic properties of iPP and the composite with the DS of 0.4 held a higher reinforcing effect. The crystallization results revealed that the added CNF acting as the crystal nucleating agents and the composite with unmodified CNF possessed the highest crystallization temperature while the composite with a DS of 0.2 exhibited the fastest crystallization rate. The foaming results showed that the finest cellular structures were obtained in the composite with the DS of 0.2 at the relatively low expansion ratio, whilst the composite with a DS of 0.4 displayed a better foamability at higher expansion ratio. Finally, the mechanical properties of these prepared foams were also compared and thoroughly studied.