This investigation explores the potential of improving the performance of poly(ethylene terephthalate) fibers by incorporating novel thermotropic liquid crystalline copolymers. Fibers were obtained by melt extrusion and the effect of processing conditions, i.e., spinning temperature, stretch ratio, and post treatment evaluated. The fibers were tested for mechanical performance, dimensional instability (shrinkage), and the development of shrinkage stresses. A segmented block copolymer consisting of rigid-rod, diad, and flexible coil segments was found to improve the performance of poly (ethylene terephthalate) (PET) fibers. At a concentration of 20 wt%, the alternating block copolymer increased the tensile modulus of the fibers by 40% and decreased free shrinkage by 20% compared to neat PET.