Transesterification of polymer blends containing polyesters is often utilized to improve the interfacial adhesion and mechanical properties of a phase-separated blend. However, in some circumstances, the transesterification can also modify the morphology (crystallinity or liquid crystallinity) of the blend components due to the disruption of the structure of a regular polymer. This, in turn, can deteriorate the mechanical properties of the blend. We present, in this article, results that correlate the extent of transesterification between a liquid crystalline polyester and polycarbonate to the change in the mechanical properties of the blend and the liquid crystallinity of the liquid crystalline polymer (LCP). The results exemplify the need to understand the role of transesterification on the morphology and mechanical properties of the blend so that the optimum processing conditions may be found. The experimental protocol can also be used as a guide to determine these optimal processing conditions.