Recently, inexpensive and readily available bio-renewable microcrystalline cellulose (MCC) has been explored as a filler to mechanically reinforce thermoplastic matrices. Most research focuses on surface modification of MCC to improve dispersion in the polymer matrix. Herein, two screw configurations (low shear (LS) and high shear (HS)) were designed for twin-screw extrusion to investigate the effect of shear, during processing, on the dispersion of MCC particles in an ethylene–vinyl alcohol (EVOH) matrix. The results demonstrate the significance of the high shear screw configuration on the size of MCC particles, and their in-situ fibrillation and distribution within the EVOH matrix. HS mixing of EVOH/MCC resulted in a significant increase in flexural strength and storage modulus compared to EVOH/MCC (LS) composites, similar to property improvement in EVOH/cellulose nanocrystal (CNC) composites at the same loading, thus providing an alternative to energy-intensive CNC in continuous melt processing without an appreciable rise in production costs.