Abstract: A method and an apparatus for manufacturing composite material including natural fiber substance, plastic based substance, and agent improving compatibility between the natural fiber substance and the plastic based substance. The substances are mixed together and mechanically pressing and/or dried with heat to remove liquid. A wet mixture with 41-99.8% water is formed at least from the natural fiber substance, the plastic based substance and the compatibility improving agent, whereby to manufacture the composite material having an internal network structure that keeps material together by chemical bonds between the plastic based substance and the natural fiber substance, the wet mixture is fed to a devolatilization process in which substance in liquid form and other gasifying volatile substances or at least a main part thereof are removed by changes in pressure, heat and mechanical mixing, and the structure of the natural fiber substance is modified if needed.