In this work, a high performance liquid crystalline epoxy composite was prepared and the effect of the alignment of LCE with long lateral substituent on the carbon fiber surface curing at low temperature on fracture toughness, dynamic mechanical, and thermal properties of liquid crystalline epoxy with lateral substituent (LCE6) was investigated by polarized optical microscopy (POM), wide angle X-ray diffraction measurements (WAXS), dynamic mechanical analysis (DMA), thermogravimetric (TGA), and scanning electron microscopy (SEM). Curing degree of the composite was observed by FTIR. The experimental results indicate that the fracture toughness, glass transition temperature (Tg), thermal stability, degradation kinetics are associated with the alignment of LCE6 along long axis of carbon fiber. The alignment of LCE6 on carbon fiber surface can increase mesogen network density, which leads to higher fracture toughness, higher thermal stability, increase of the activation energies and higher Tg of the composite. The dynamic mechanical analysis shows that the compoaite possesses extremely higher dynamic storage moduli, which indicates that this LCE6/DDM/CF composite can be a high performance composite. Thus, the compoaite can be a potential candidate for advanced composites. © 2014 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 2014, 131, 40363.