Liquid crystalline polymer-poly(butylene terephthalate) (LCP/PBT) blends were prepared by melt mixing. The LCP employed was a thermotropic copolyesteramide based on 30 mol % of p-amino benzoic acid (ABA) and 70 mol % of poly(ethylene terephthalate) (PET). The thermal, dynamic mechanical and rheological properties, morphology, and crystal structure of LCP/PBT blends were studied. The results showed that the semiflexible ABA30/PET LCP is miscible in the melt state with PET, and they are partial miscible in the solid state. Differential scanning calorimetric measurements showed that the introduction of the semiflexible LCP into LCP/PBT blends retards the crystallization rate of PBT. However, the LCP dispersed phase acted as the sites for the nucleation of spherulites and enhance the degree of crystallinity of PET. Hot-stage optical microscopy examination revealed that the LCP microfibers with random orientation are dispersed in the PET matrix of compression molded LCP/PBT blends. Under the application of a shearing force, the LCP domains in the PET matrix tended to deform into microfibers, and to orient themselves along the flow direction. The formation of microfibers resulted in an increase of the storage modulus. The torque measurements indicated that the melting viscosity of the LCP/PBT blends is much lower than that of the pure PET. Finally, the wide-angle X-ray diffraction patterns indicated that PET shows no structural change with the incorporation of LCP, but the apparent crystal sizes of several diffraction planes change significantly.