Poly(ethylene terephthalate) (PET) matrix was modified by blending with a specially prepared thermotropic liquid crystalline polymer (TLCP), in the hope to make the in situ composite during fiber spinning. It has been found that the TLCP did not fibrillate in the PET matrix at any concentration under given processing conditions, although it did in the polycarbonate matrix. This was explained by the low interaction parameter (low surface tension) and partial degree of mixing of PET and TLCP. The TLCP was an excellent processing aid even at very low concentrations, but it had an adverse effect on the strength of highly drawn fibers. The modulus of both undrawn and highly drawn fibers increases slightly with increasing TLCP concentration.