Structural transformations taking place during the thermal stabilization of polyacrylonitrile (PAN) fiber used for the production of carbon fiber were characterized using a combination of polarized infrared spectroscopy, thermogravimetric analysis (TGA), scanning electron microscopy (SEM), and density measurements. Direct relationship between the increasing oxygen content and the density values was confirmed with increasing stabilization time. Linear density values were found to be directly influenced by the stabilization time. Thermal stability of stabilized precursor fibers was evaluated in terms of weight loss and residual weight fraction. The results showed that a residual weight fraction of 65 % at $1000^{circ}C$ can be obtained but longer stabilization time resulted in a loss of residual weight fraction due to excessive thermal degradation. SEM was used for the observation of surface morphological features of stabilized precursor fibers. Polarized infrared spectroscopy showed the loss of molecular orientation of methylene ($CH_2$), nitrile ($C{equiv}N$), and carbonyl (C=O) groups in direct response to the effects of cyclization, dehydrogenation, and amorphization (i.e. decrystallization) processes taking place during the stabilization stage.