In this study, the effect of chemical structural transformation on the microstructure and mechanical properties of polyacrylonitrile precursor fibers in thermal oxidative stabilization (TOS) process was investigated. The chemical transformation was tracked quantitatively by combining the curve-fitting and second-derivative operations in Fourier transform infrared spectroscopy spectra. The aggregation and radial structural changes in the fibers were investigated by wide-angle X-ray diffraction and scanning electron microscope analysis. It was found that the degree of stabilization of thermal treated fibers in chemical evolution increased with the increase in TOS temperature and time. The increase in the extent of cyclization promoted the formation of conjugated carbonyls, whereas it decreased the crystallinity and crystallite size. Under the action of diffusion process, oxidation reaction caused the fracture morphology of radial structure transformed from ductility to brittleness. The extent of cyclization of fibers controlled in an appropriate range resulted in the high degree of oxidation stabilization and good structural properties, not the higher, the better. This result was evidenced by the excessive oxidative and cross-linking reaction in the skin of fibers resulted in the phenomenon that more obvious skin-core structure and reduced elongation at break when the cyclization degree was more than 83%.