The miscibility of liquid crystalline poly(p-oxybenzoate-co-p-phenyleneisophthalate) (HIQ) and polycarbonate (PC) was investigated with differential scanning calorimetry (d.s.c.). It was found that blends of liquid crystalline HIQ and PC showed a single glass transition temperature across the whole composition range. Annealing these blends at temperatures slightly above the melting point of HIQ, ester exchange occurred as confirmed both by i.r. and n.m.r. spectroscopy. The apparent miscibility of HIQ and PC was caused by this reaction. The blends retained liquid crystalline characteristics in the first few reaction minutes. As the transesterification continued, the bisphenol-A segment in PC reacted with both isophthalate and oxybenzoate segments in HIQ. This resulted in amorphous polymers. These amorphous polymers exhibited a single glass transition temperature higher than that for both pure polymers.