Morphological, theological, and mechanical properties of poly(hydroxy ether of bisphenol A) (phenoxy) and a Vectra liquid crystalline copolyester (LCP) blends were investigated. Scanning electron micrographs of fracture surfaces of injection-molded samples show that the LCP forms an elongated fibrous dispersion in the phenoxy matrix. As the mixing time increases, the tensile strength and modulus increase while the elongation at break remains almost constant. These improvements are attributed to the formation of LCP-grafted phenoxy by the interchange reaction between phenoxy and LCP. The interchange reaction was identified by DSC, a rheometer, and a FTIR spectrometer. The graft copolymer gives better adhesion between the two phases and thus improves mechanical properties of the blends.