This study reports on the main cause of the reduced tensile strength of carbon fibers (CFs) by investigating the microstructural changes in the CFs that are undergoing mainly two processes: catalyst nanoparticle formation and chemical vapor deposition (CVD). Interestingly, the two processes oppositely influenced the tensile strength of the CFs: the former negatively and the latter positively. The catalysts coating and nanoparticle formation degraded the CF surface by inducing amorphous carbons and severing graphitic layers, while those defects were healed by both the injected carbons and interfaced CNTs during the CVD process. The revealed degradation and healing mechanisms can serve as a fundamental engineering basis for exploring optimized processes in the manufacturing of hierarchical reinforcements without sacrificing the tensile strength of the substrate CFs.