Thermal properties and transesterification reaction of blends of polyarylate (PAr) and a thermotropic liquid crystalline polymer (LCP) were investigated by differential scanning calorimetry (DSC) and Fourier Transform infrared (FT-IR) spectroscopy. In the thermogram of PAr-LCP blends, two glass transition temperatures (T(g)s) were observed. Phase behavior of the blends revealed that the LCP dissolved more in the Phr-rich phase than did the PAr in the LCP-rich phase, indicating partial miscibility between two polymers. The polymer-polymer interaction parameter (chi(12)) was calculated, and ranged from 0.069 to 0.076. In the calculation of the chi(12), the anisotropy of the LCP was considered. After annealing, the two T(g)s of the blends were shifted toward the center. In the FT-IR spectroscopy study of the annealed PAr-LCP blends, three new characteristic peaks of the ester group were detected. The DSC and FT-IR results suggested that transesterification reaction between PAr and LCP occurred under the annealed condition.