A modified oxidative thermal treatment was developed to increase the softening point of a pitch precursor while minimizing the pitch yield loss. An O2/N2 mixed gas was used as the reaction gas, and the softening point and pitch yield variations were measured at different O2 concentrations. As a result, when softening point increased from 130 to 249 °C, the pitch yield remained almost constant (only 0.6% drop). Structural analysis performed via MALDI-TOF, FTIR, and 1H and 13NMR showed that condensation reaction between pitch molecules in the presence of O2-containing gas followed a different mechanism depending on the O2 concentration. In addition, the precursors were spun into pitch fibers and carbonized at 1100 °C. During the spinning, they exhibited excellent spinnability without breakage for more than 10 min of spinning. The obtained carbon fibers showed high tensile strengths comparable to that of a commercial isotropic-pitch-derived carbon fiber (0.83 GPa). The current study showed that the modified thermal treatment is useful for the preparation of cost-competitive pitch precursors suitable for carbon fiber production.