Blends of poly(ethylene terephthalate-Co-p-oxybenzoate), PET/PHB, with poly(ethylene terephthalate), PET, have been studied in the form of as-spun and drawn fibers. DSC melting and crystallization results show that the PET is compatible with LCP and the crystallization of PET decreases by the addition of LCP in the matrix. Upon heating above the crystal melting temperature of PET, the blend shows good dispersion of LCP in the PET matrix. Wide angle X-ray diffraction of drawn blended fibers show the possible formation of LCP oriented domains. The mechanical properties of drawn fiber up to 10 wt% LCP composition exhibit significant improvement in tensile modulus and tensile strength with values of 17.7 GPa and 1.0 GPa, respectively. Values of modulus are compared with prediction from composite theory, assuming the blend system as nematic domains of LCP, dispersed in PET matrix.