A twin-screw extruder to conduct compounding or blending such as nano-fillers and polymer alloys is used for the innovative creation of functionalization and reinforcement of various polymers. In this study recent progresses in compounding technology were reviewed concerning newly developed compounding techniques such as the separate feeding for optimizing mixing of each component, the water assist mixing for improving dispersion and the dewatering/devolatilization for process rationalization by use of a twin-screw extruder. Furthermore, the hybridized compounding technology combined with polymer blending and inorganic filler addition were discussed to obtain higher physical and chemical performance of polymer composites mainly based on natural rubber. To apply commercial production, innovative compounding systems were proposed for polymer composites based on natural rubber using sophisticated reactive twin-screw extrusion technology.