Raman scattering, x-ray diffraction, and BET measurements are used to study the effect of heat treatment on the microstructure of activated carbon fibers (ACFs) and to correlate the structural changes with the metal-insulator transition observed in the electronic transport properties of heat-treated ACFs. A sequence of events is identified, starting with desorption, followed by micropore collapse plus the stacking of basic structural units in the c-direction, and ending up with in-plane crystallization. The graphitization process closely resembles that depicted by Oberlin's model, except that the final material at high-temperature heat treatment remains turbostratic. Because the metal-insulator transition was observed to occur at heat-treatment temperature T m ~ 1200 °C, which is well below the J H T value (2000 °C) for in-plane crystallization, we conclude that this electronic transition is not due to in-plane ordering but rather to the collapse of the micropore structure in the ACFs. Raman scattering also provides strong evidence for the presence of local two-dimensional graphene structures, which is the basis for the transport phenomena observed in heat-treated ACFs.