Phase behavior, thermal, theological and mechanical properties plus morphology have been studied for a binary polymer blend. The blend is phenolphthalein polyethersulfone (PES-C) with a thermotropic liquid crystalline polymer (LCP), a condensation copolymer of p-hydroxybenzoic acid with ethylene terephthalate (PHB-PET). It was found that these two polymers form optically isotropic and homogeneous blends by means of a solvent casting method. The homogeneous blends undergo phase separation during heat treatment. However, melt mixed PES-C/PHB-PET blends were heterogeneous based upon DSC and DMA analysis and SEM examination. Addition of LCP in PES-C resulted in a marked reduction of melt viscosity and thus improved processability. Compared to pure PES-C, the charpy impact strength of the blend containing 2.5% LCP increased 2.5 times. Synergistic effects were also observed for the mechanical properties of blends containing < 10% LCP. Particulates, ribbons, and fibrils were found to be the typical morphological units of PHB-PET in the PES-C matrix, which depended upon the concentration of LCP and the processing conditions.