Cyanoethylation of jute fiber in the form of nonwoven fabric was successfully achieved using an acrylonitrile monomer which is said to react with the hydroxyl groups of fiber constituents. The degrees of cyanoethylation to different extents were undertaken by varying the reaction time. An IR study showed that extent of cyanoethylation increases with increase of the reaction time. Cyanoethylated fibers thus obtained were further treated with unsaturated polyester resin to obtain modified fiber composites. These composites have been found to be tolerant against cold and boiling water where water absorption and thickness swelling are much reduced compared to those of unmodified fiber composite. It is also observed that the moisture content of the modified fiber composites is remarkably reduced. Cyclic tests reveal that use of cyanoethylated fiber leads to improvement of the dimensional stability of the fiber composites. The mechanical properties of the modified fiber composites improved remarkably due to better bonding at the fiber-matrix interface and this effect is more pronounced with a higher degree of cyanoethylation. A scanning electron micrograph of the fractured surfaces of cyanoethylated jute composite showed excellent retention of resin on broken fiber ends, whereas the unmodified composite showed uncoated fibers and holes in the matrix. DSC data demonstrated that the moisture content of the composites reduces with increase of the cyanoethylation. Both TG and DSC thermograms showed an additional peak due to decomposition of cyanoethyl group which is shifted to a higher value with the extent of cyanoethylation. However, the cellulose degradation temperature remained almost the same.