Combined homogenisation and sonication treatments of micron-sized lyocell fibres were used to generate microfibrillated cellulose (MFC) with fibril diameters of ∼350 nm. No further reduction in fibril diameter was observed after 30 min treatment. Poly(vinyl alcohol) (PVA) composites reinforced with these fibrils were fabricated using solvent casting and physical and mechanical properties were investigated. The presence of MFC in PVA increased the thermal degradation of the polymer. An increase in both the tensile strength and modulus of the composites was observed for up to 3 wt.% of fibrils; beyond this point no significant increases were observed. An estimate of ∼39 GPa is made for the fibril modulus based on this increase. Stress-transfer between the polymer resin and the fibrils was investigated using Raman spectroscopy. Stress transfer in the composite is shown to be greater than that of a pure network of fibres, indicating a good fibre-matrix bond