In this work, ultrafine full-vulcanized powdered rubber (EA-UFPR) was incorporated into β-nucleated isotactic polypropylene (β-iPP) in order to investigate the combined effects of EA-UFPR and β-nucleation on mechanical properties and heat distortion temperature (HDT) of β-iPP. A large enhancement of toughness verified as a synergistic effect had been achieved by adding a small amount of EA-UFPR (≤2 wt%) into β-nucleated iPP. Decreased crystallization kinetics and even more interestingly, a transformation of crystalline morphology from β-spherulites to bundle-like β-crystals were observed due to a possible retarded self-assembly of the nucleating agent by adding small amounts of EA-UFPR. On one hand, the combined effects between EA-UFPR particles and β-crystalline morphology on promoting the plastic deformation of the matrix play important roles in enhancing the toughness. On the other hand, a unique interconnected structure composed by the bundle-like crystals and dispersed EA-UFPR particles was proposed for the improvement in impact strength and HDT. Our work provides a new way to control crystalline morphology and largely improve the toughness and heat distortion temperature of iPP, which are particularly important for the industrial application of iPP.