Short carbon fibre reinforced polyetheretherketone (PEEK) composites with and without transcrystalline interphase are prepared under different conditions, and are used to investigate the effect of transcrystalline interphase on the tensile behaviour of semicrystalline thermoplastic polymer based composites. Volume dilatometry and scanning electron microscopy (SEM) are also employed as supplementary means. It is found that the formation of transcrystalline interphase improves such important characteristics of the composites as tensile stiffness, strength and toughness. The transcrystalline interphase enhances fibre-matrix adhesion and reduces stress concentration and cavitation at the fibre ends. The predominant deformation mechanism of the composite is changed from cavitation to shearing process in the presence of transcrystalline interphase, and moreover, significant local plastic deformation that absorbs more energy occurs, resulting in cohesive failure of the composite instead of adhesive failure happening to the composite without transcrystalline interphase.