The lyotropic behaviour of a poly(ester amide) (PEA), poly[bis (terephthalate butyramide) hexane] (PBTBH) containing aliphatic diamide links prepared through the amido diol route was studied by isothermal viscosity measurements at different shear rates and cross polarized light microscopic measurements in m-cresol, N-methyl pyrollidone (NMP) and concentrated sulphuric acid. The effects of polarity of solvent, shear rate and polydispersity on the threshold concentration were investigated. The viscosity values of the liquid crystalline (l.c.) PEA were found to increase with increase in concentration, reach a maximum and then decrease sharply. The critical concentration at which the viscosity–concentration curve shows a maximum and the threshold concentration where maximum anisotropy was observed did not coincide. The threshold concentrations in the viscosity-concentration curve obtained for the PEA are 56, 54 and 50 wt%, respectively, in m-cresol, NMP and concentrated sulphuric acid. The present experiments show that the threshold concentration depends on the polarity of the solvent, shear rate and polydispersity of the polymer. A narrow molecular weight distribution gives a sharper peak with a lower threshold concentration. PBTBH exhibited the typical shear thinning region under low shear rate peculiar to l.c. polymer solutions. The Newtonian plateau and the second shear thinning region under higher shear rate were also observed. Region I behaviour was confirmed by a number of observations, namely (a) the lack of scaling of transient viscosities during startup with strain and (b) the strong dependence of D 0 on concentration. In Region I, the viscosity showed a mild dependence on shear rate. This corresponds to a decrease of texture size with shear rate approximately as D −1/2, as in the Wissbrun model. The formation of the l.c. phase was confirmed by polarized light microscopy. Appearance of anisotropic inclusions in an isotropic phase started appearing prior to the occurrence of the critical concentration. As the concentration of anisotropic phase increased, the well known ‘phase inversion’ took place and isotropic inclusions in anisotropic phase started appearing as the system approached the threshold concentration. A fully anisotropic phase above the threshold concentration gave the typical nematic threaded texture under the polarized light microscope. A polydomain microstructure was observed in the shear thinning region under low shear rate, which tumbled down to a monodomain structure on application of higher stress.