The aim of this study was synthesis of two kinds of modified polyphenylene sulfide (PPS) containing hydroxyl or carboxyl units, and investigation of the effect of modified PPS used as compatibilizer on the interfacial micromechanical properties of carbon fiber (CF) reinforced PPS composites. High molecular weight copoly(1,4-phenylene sulfide)-poly(2,5-phenylene sulfide acid) (PPS-PPSA) and copoly(1,4-phenylene sulfide)-poly(2,5-phenylene sulfide phenol) (PPS-PPSOH) were synthesized by the reaction of dihalogenated monomer and sodium sulfide via nucleophilic substitution polymerization under high pressure. According to the results of FT-IR, X-ray diffraction, DSC, TGA, mechanical test, contact angle test and solubility experiments, the PPS-PPSA and PPS-PPSOH was found to have analogous structure and improved hydrophilic property comparing with pure PPS. There was a good physical compatibility between the modified PPS and the pure PPS. The apparent interfacial shear strength (τapp) of the composite (measuring with microbond test) and scanning electron microscopy (SEM) also showed that the modified polyphenylene sulfide can improve the micro-mechanical properties and interfacial bonding between CF and PPS matrix.