Formation of nano-fibrillar composite structures provides an effective method for preparing thermoplastic nanofibers. By mixing two immiscible thermoplastic polymers in a twin screw extruder, poly(trimethylene terephthalate) (PTT) formed nano-fibrillar morphology in cellulose acetate butyrate (CAB) matrix, and then PTT nanofibers were obtained from PTT/CAB in situ fibrillar composites after removing the matrix phase of CAB. Blend ratio, shear rate, and draw ratio were three important parameters in the extrusion process, which could affect the shape and size of nanofibers. By varying the process conditions, average diameter of PTT nanofibers could be controlled in the range of 80-400 nm. Besides this, the mechanism of nano-fibrillar formation in PTT/CAB blends was also studied by collecting samples at different stages in the extruder. The morphology developmental trends of PTT dispersed phase with different blend ratios were nearly the same. From initial to metaphase and later phase development, the PTT dispersed component undergo the formation of sheets, holes, and network structures, then the size reduction and formation of nanofibers.