Polyacrylonitrile (PAN) fibers containing up to 40 wt% cellulose nanocrystals (CNC) have been successfully stabilized and carbonized to make carbon fibers. Under the batch process, PAN/CNC based carbon fibers exhibit a tensile strength in the range of 1.8–2.3 GPa, and tensile modulus in the range of 220–265 GPa, which are comparable to the control PAN-based carbon fibers. Based on the transmission electron microscopy study, individually distributed CNC regions surrounded by PAN matrix were observed in the stabilized and carbonized fibers. Carbonized fibers show two distinct stabilized and carbonized regions. This study shows that biphasic carbon fibers can be made from the PAN/CNC system.