Oxidation process control plays a key role in influencing the development of carbon fiber properties. The characterization of oxidized fibers is difficult because of their poor solubility in organic solvents and strong absorbance. X-ray photoelectron spectroscopy (XPS) has been used in the surface characterization of carbon fiber precursors during the oxidation or stabilization process. The changes in surface elemental composition and functionalities of carbon and oxygen have been identified. Quantitative changes have been noticed in surface functional groups as the oxidation process proceeds.