Abstract Expanded polystyrene (EPS) constitutes a considerable part of thermoplastic waste in the environment in terms of volume. In this study, this waste material has been utilized for blending with silica-reinforced natural rubber (NR). The NR/EPS (35/5) blends were prepared by melt mixing in a Brabender Plasticorder. Since NR and EPS are incompatible and immiscible a method has been devised to improve compatibility. For this, EPS and NR were initially grafted with maleic anhydride (MA) using dicumyl peroxide (DCP) to give a graft copolymer. Grafting was confirmed by Fourier Transform Infrared Spectroscopy (FTIR) spectroscopy. This grafted blend was subsequently blended with more of NR during mill compounding. Morphological studies using Scanning Electron Microscopy (SEM) showed better dispersion of EPS in the compatibilized blend compared to the noncompatibilized blend. By this technique, the tensile strength, elongation at break, modulus, tear strength, compression set and hardness of the blend were found to be either at par with or better than that of virgin silica filled NR compound. It is also noted that the thermal properties of the blends are equivalent with that of virgin NR. The study establishes the potential of this method for utilising waste EPS.