Stress graphitization is a unique phenomenon at the carbon nanotube (CNT)-matrix interfaces in CNT/carbon matrix (CNT/C) composites. A lack of fundamental atomistic understanding of its evolution mechanisms and a gap between the theoretical and experimental research have hindered the pursuit of utilizing this phenomenon for producing ultrahigh-performance CNT/C composites. Here, we performed reactive molecular dynamics simulations along with an experimental study to explore stress graphitization mechanisms of a CNT/polyacrylonitrile (PAN)-based carbon matrix composite. Different CNT contents in the composite were considered, while the nanotube alignment was controlled in one direction in the simulations. We observe that the system with a higher CNT content exhibits higher localized stress concentration in the periphery of CNTs, causing alignment of the nitrile groups in the PAN matrix along the CNTs, which subsequently results in preferential dehydrogenation and clustering of carbon rings and eventually graphitization of the PAN matrix when carbonized at 1500 K. These simulation results have been validated by experimentally produced CNT/PAN-based carbon matrix composite films, with transmission electron microscopy images showing the formation of additional graphitic layers converted by the PAN matrix around CNTs, where 82 and 144% improvements of the tensile strength and Young's modulus are achieved, respectively. The presented atomistic details of stress graphitization can provide guidance for further optimizing CNT-matrix interfaces in a more predictive and controllable way for the development of novel CNT/C composites with high performance.