Polyacrylonitrile (PAN) precursor fibers were modified for different periods of time using hydrogen peroxide aqueous solution. A variety of tests were employed to characterize the fibers. The modification could induce cyclization and oxidation in the precursor fibers, as reflected by the changes in length and diameter of the fibers, and the results of Fourier transform infrared spectroscopy (FTIR) and X-ray photoelectron spectroscopy (XPS). Compared with the unmodified fiber, the modified fibers released less heat during a heating process similar to stabilization of PAN precursor fiber. Also, the modified fibers showed lower characteristic temperatures on differential scanning calorimetry (DSC) thermograms, and lower onset temperature of weight loss on thermal gravimetry (TG) curves. The modified fibers had more surface defects and hence exhibited lower tenacity and tensile modulus. Compared with the unmodified fibers, however, the modified fibers had smoother surface and fewer defects after stabilization. The strain decreased with increasing temperature under a constant tension for all the fibers. At the temperatures above $200^{circ}C$, the shrinkage of the fibers decreased with the increase of modification time, because a certain degree of cyclization and oxidation occurred in modified fibers, making them shrink less in the temperature range equivalent to stabilization.