Swelling and fibrillation of two kinds of lyocell, $Tencel^{(R)}$ and $Lyocell^{(R)}$, were investigated using polarizing and scanning electron microscope (SEM). $Tencel^{(R)}$ of a representative lyocell showed that loop tenacity which is related to wrinkle and resilience of fiber does not show significant reduction in wet state. Two kinds of lyocell exhibited surprising degree of swelling in aqueous NaOH solution under free tension. Diameters of $Tencel^{(R)}$ and $Lyocell^{(R)}$ swelled up to 670% and 830%, respectively in the range of around 10% NaOH concentration. Molecular orientation estimated by birefringence also reduced remarkably in alkaline solution. Moreover, diameter and birefringence which changed in alkaline solution did not recovered to original level even after washing and drying. Fibrillation of $Lyocell^{(R)}$ fiber observed by SEM seems to be easier than that of $Tencel^{(R)}$. In order to understand the difference between $Tencel^{(R)}$ and $LyoceJl^{(R)}$, further study on the structure of the two fibers will be followed.