Dichlorocarbene modification of natural rubber (NR) was carried out by alkaline hydrolysis of chloroform in presence of cetyl trimethyl ammonium bromide as phase transfer catalyst. Modified NR was caracterized chemically by chlorine estimation, FTIR, DSC and thermal studies. Extent of modification depended on the time and temperature of reaction. FTIR studies revealed the introduction of chlorine through a cyclopropyl ring to the main chain of NR. Chemical modification considerably increased the Tg of NR as observed from the DSC thermograms. Thermogravimetric analysis showed that the degradation temperature shifted towards the higher side with increased level of chlorination. Modification was accompanied by a change in the physical nature of NR from a soft flexible state to a hard non-tacky form. Peroxide vulcanizates of modified NR showed higher tensile strength than that of pure NR. Solvent swelling studies indicated polar nature of the modified NR a nd its showed lower swelling in ASTM oils. Oil swelling nature of modified NR containing 15;and more chlorine content was closer to that of hydrogenated nitrile rubber (HNBR). Due to the polar nature, modified NR mixed well with the polar rubber HNBR and showed improved properties for peroxide vulcanizates.