Copolyesters of poly[ethylene terephthalate) (PET) with a liquid crystalline polymer (LCP), SBH 1:1:2, have been synthesized by the polycondensation, carried out in the melt at temperatures up to 300 degrees C of sebacic acid (S), 4,4’-dihydroxybiphenyl (B), and 4-hydroxybenzoic acid (H) in the presence of PET. The PET-SBH copolyesters have been characterized by differential scanning calorimetry, scanning electron microscopy, X-ray diffraction, etc., and the relationships between properties and preparation conditions are discussed. The copolyesters show a biphasic nature, which is more evident for the products synthesized with a thermal profile comprising relatively lower temperatures (220-230 degrees C) in the initial stages of the polycondensation. Another procedure, whereby the addition of PET to the monomer charge was made at a later stage of the reaction, has also been devised to prepare copolyesters with enhanced blockiness. The compatibilizing effect of the PET-SBH copolymers toward PET/SBH blends has been investigated. PET/SBH blends (75/25, w/w) have been prepared in a Brabender mixer at 270 degrees C and 30 rpm, with and without the addition of appropriate amounts (2.5, 5, and 10%, w/w) of 50-50 PET-SBH copolyesters. Different blending techniques have been used according to whether the three components were fed into the mixer at the same time, or one of them was added at a later stage. The effect of the type and the amount of added copolyester has been studied through morphological, thermal, and mechanical characterizations. The results show that the addition of small amounts similar to 5 wt% of copolyesters leads to improved dispersion and adhesion of the minor SBH phase. Moreover, while the tensile modulus of the blends is practically unaffected by the addition of the copolymer, a substantial increase of both tensile strength and elongation to break is found for a concentration of added copolyester of similar to 5 wt%. Slightly better results were apparently obtained by the use of a block copolyester.