Phenolic resins have been successfully used in the manufacture of C/C Composite hardware. However, they require costly, multiple impregnation–carbonization cycles due to their low char yield. Polyarylacetylene (PAA) resin is a promising alternative carbon precursor that possesses numerous advantages due to its higher char yield and low mass loss. In addition, both thermoset-derived carbons are non-graphitizable and rely on stress graphitization for matrix development, which ultimately dictates composite mechanical performance. The stress graphitization behavior of both composite systems was investigated and related to their mechanical behavior. PAA and phenolic-derived/T50 C/C composites were processed to a series of heat-treatment temperatures (HTTs), (1100°, 1800°, 2800°C) and compared. Increases in localized graphitization as verified by image analysis, AFM, and Raman were observed with increasing HT for both systems, though notably to a much higher degree for the phenolic system. We believe this to be a result of the larger degree of matrix pyrolysis shrinkage experienced at the fiber-matrix interface promoting molecular alignment. The mechanical properties of both composites were strongly affected by the HTT, primarily due to a weakening of the fiber-matrix interface. However, the phenolic-derived composite exhibited a 40% greater increase in fiber strength utilization over the PAA-derived composites after 2800°C, which is attributed to this highly oriented microstructure which contributes favorably to intra-matrix failure and crack deflection. Although there are benefits in utilizing high char yield carbon precursors that reduce manufacturing timelines, one must also account for possible differences in microstructure development when designing these composites for next generation systems.