Melt‐spun poly(ethylene terephthalate) fibers were isothermally heat‐treated at constant length. Microstructural changes occurring during the heat‐treatment were monitored using specific gravity, wide‐angle x‐ray scattering (WAXS), small‐angle x‐ray scattering (SAXS), optical birefringence, and static mechanical testing. Major changes in the density of the most highly oriented fiber examined occurred in times below 100 ms. For less oriented fibers, the time scale for significant density change increases to the 1–10 s range. The course of birefringence increase approximates that of the density. WAXS measurements show that crystallinity develops at essentially constant crystal perfection, but that the orientation of the crystallites first decreases and then increases with time. SAXS results show development of a four‐point pattern, the azimuthal angle of the lobes decreasing with initial orientation, with temperature, and with time. A streak transverse to the fiber axis develops more rapidly than do the lobes. A two‐stage transformation process is envisaged, the first stage being the formation of defective crystal fibrils and the second being internal rearrangement of the fibrils to form more perfect crystallites, separated by more amorphous zones. Changes in the crystallite orientation are related to constraints of the noncrystalline material on the crystallites.