High performance carbon fibers are mostly produced from polyacrylonitrile (PAN). Its chemical structures strongly affect the further steps of carbon fiber manufacturing. In this work, highly isotactic (> 60%) PAN was synthesized by template-assisted solid phase polymerization in the presence of magnesium chloride. We systematically studied the effect of isotacticity of PAN on its solution rheology, fiber spinning, thermal stabilization and carbonization. Highly isotactic PAN-based carbon fibers were first produced in this work. The higher isotacticity of PAN was observed to affect the storage stability of PAN solutions, coagulation processes, the structures of PAN fibers, stabilization reactions and carbonization yields. The improvement of PAN isotacticity benefits its thermal stabilization, but also introduces many problems during carbon fiber manufacturing which need to be carefully considered.