A newly developed production method for wood flour was proposed for a wood-plastic composite (WPC) and its mechanical properties were investigated. This production process consists of step-wise wet milling using a disk mill, drying, and dry milling by a disk mill. The developed method makes it possible to easily produce fibrillated and uniformly-sized wood flour. The mechanical properties of polypropylene-based WPC were improved by the addition of the produced wood flour. These results suggest that wood WPC has the potential to be introduced into the field of automotive plastics.