Lignin, a waste product in the paper and pulping industries, has lots of potential in raw material production due to its high carbon content and low cost. However, most Lignin is considered waste and is directly burnt. Research efforts have focused on the valorization of lignin as a carbon fiber precursor. Waste polyethylene terephthalate (PET) presents a promising feedstock for producing high-value carbon fibers. PET is one of the most widely produced plastics, extensively used in packaging, textiles, and consumer goods. However, its ubiquitous presence has led to significant environmental challenges due to the accumulation of post-consumer waste. Traditional recycling approaches often face limitations in maintaining the quality and utility of recycled PET. In this study, Lignin and terephthalic acid derived from waste PET were chemically esterified and then spun as a carbon fiber precursor with polyacrylonitrile (PAN). These covalent linkages facilitated molecular-level integration, promoting chain extension and a degree of crosslinking, which are critical for enhancing the thermal stability and mechanical integrity of the precursor fibers. Following esterification, the modified polymer blend was subjected to a spinning process, and subsequent carbonization transformed the structure into carbon fibers. The fiber structure was analyzed using scanning electron microscopy (SEM), and crystallinity was measured via XRD. The resultant fibers exhibited superior mechanical performance compared to those derived from conventional waste kraft lignin alone, thereby demonstrating a creative and economical method to synergistically upcycle two environmentally significant waste streams.