The main objective of this work was to use hydroxyl-functionalized graphene as a compatibilizer for an immiscible blend. A neat polyoxymethylene/styrene-butadiene-styrene binary blend was prepared at a constant ratio (80/20) and then was compounded with different loading amounts of hydroxyl-functionalized graphene (0.25, 0.5, 0.75, and 1 wt%). The formation of droplet-matrix morphology during blending was observed in microscopy images. A deep understanding of the compatibility was inspected through studying the mechanical, rheological, and microstructural properties. By inspecting the localization of nanoparticles, triple functions of hydroxyl-functionalized graphene as a compatibilizing/reinforcing/lubricating agent were elucidated. The mechanical properties showed that the best compatibility with the ultimate performance was related to the nanocomposite containing 0.25 wt%. Furthermore, the electrical conductivity of the prepared nanocomposites was investigated. Thermodynamic/kinetic studies showed the tendency of hydroxyl-functionalized graphene to disperse droplets, however as the loading value increases, the probability of its presence in the matrix also increases, creating conductive pathways for conductive purposes. The lowest resistance and highest volume of electrical conductivity (8.4 × 10−6 S.cm−1) were shown by 1 wt% FG.