Steam-exploded fibers from Yellow poplar (Liriodendron tulipifera) wood were assessed in terms of their thermal stability characteristics, their impact on torque during melt processing of a thermoplastic cellulose ester (plasticized CAB) matrix, their fiber-matrix adhesion and dispersion in composites, and their mechanical properties under tension. Fibers included water-extracted steam-exploded fibers (WEF), alkali extracted fibers (AEF), acetylated fibers (AAEF), and a commercial milled oat fiber sample (COF) (i.e., untreated control). The results indicate that the thermal stability of steam-exploded fibers increases progressively as the fibers are extracted with water and alkali and following acetylation. The greatest improvement resulted from the removal of water-soluble hemicelluloses. The modification by acetylation contributed to improved interfacial wetting that was revealed by increased torque during melt processing. Whereas modulus increased by between 0 and 100% with the incorporation of 40% fibers by weight, tensile strength either declined by 1/3 to 1/2 or it increased by a maximum of 10%, depending on fiber type. AAEF composites the best mechanical properties. Fiber-aspect ratio was reduced to an average of 25-50 from much greater than 200 during compounding. The superior reinforcing characteristics of AAEF fibers were also reflected by SEM, which revealed better fiber-matrix adhesion and failure by fiber fibrillation rather than by fiber pullout.