When unoriented polyacrylonitrile (PAN) is heated from room temperature, two glass transitions are observed at similar to 100 degreesC and similar to 150 degreesC. Further heating at moderate heating rates, such as 10 degreesC/min, a degradation exotherm is seen at similar to 340 degreesC. But if a very fast heating rate (100 degreesC/min) is used, a melting endotherm can be seen at similar to 320 degreesC before the degradation exotherm. When highly oriented PAN is heated, only a single glass transition is seen at similar to 100 degreesC, whereas the melting/degradation still occurs at similar to 340 degreesC. The X-ray fiber pattern of oriented PAN at room temperature shows just two equatorial peaks (d(1) = 0.525 nm and d(2) = 0.304 nm); any meridional or off-axis scattering is very weak and diffuse. This diffraction pattern remains essentially unchanged until more than 250 degreesC, in the sense that different peaks do not appear or existing peaks disappear. Another surprising and important feature is the existence of a thermoplastic state well below the melting point, which allows the material to be molded into a transparent sheet. Here, a new phase scheme is proposed to interpret the experimental observations on the thermal behaviour of PAN. There are two key ideas: first, there is a thermodynamically stable hexagonal mesophase in PAN; second, unoriented PAN has a two-phase morphology, whereas oriented PAN tends toward a single-phase material. In unoriented samples, there are mesophase and amorphous domains that are both in a glassy state at room temperature. At similar to 100 degreesC, the mesophase glass transforms to the mesophase melt, whereas the amorphous domains become rubbery at about similar to 150 degreesC. In PAN with a single-phase morphology (highly oriented and/or thermally annealed polymer), the amorphous phase is a minor component and hence only a single glass transition at similar to 100 degreesC is observed from the mesophase glass to mesophase melt transformation. The differential scanning calorimeter endotherm at similar to 320 degreesC must be interpreted as the mesophase isotropization temperature. On cooling from the mesophase, PAN does not crystallize because of the lack of stereoregularity, and only a mesophase glass is formed. The mesophase has not been detected in the past because of its extreme viscosity, which means the material does not flow easily.