Wood pulp based regenerated cellulose fibers like Lyocell and viscose which are from natural origin have high and even quality; used to develop superior composites with good properties. In this project, Lyocell and viscose fibers were reinforced in chemically modified soybean based bio-matrix, acrylated epoxidized soybean oil (AESO) by compression molding technique. The composites are characterized for mechanical performance by tensile, flexural and impact tests, viscoelastic performance by dynamical mechanical thermal analysis (DMTA) and morphological analysis by scanning electron microscopy (SEM). In general, Lyocell composites had better tensile and flexural properties than viscose based composites. The same goes with elastic and viscous response of the composites. Hybrid composites were formed by fiber blending; on addition of Lyocell to viscose based composites improved the properties. The amount of Lyocell and viscose fibers used determined the properties of hybrid composites and the possibility of tailoring properties for specific application was seen. Hybrid composites showed better impact strength. Morphological analysis showed that the viscose composites had small fiber pull out whereas Lyocell composites had few pores. Hybrid composite analysis showed that they had uneven spreading of matrix; delamination occurred on constant heating and cooling. To overcome the above mentioned issue and to reduce the water absorption, surface modification of the fiber was done by alkali treatment and silane treatment. The effect of treatment is done through swelling, water absorption and morphological analysis tests. The properties could be increased on proper modification of the fibers. The results show the good potential of these composites to be used in automotives and construction industries.