Conventional short‐fiber thermoplastic compounds (fiber length usually <1 mm) are manufactured by incorporation of short fibers into thermoplastic resins either by dry blending, before injection molding (IM), or by extrusion compounding, using single‐ or twin‐screw extruders. In extrusion compounding, the matrix resin and chopped fibers are melt mixed in an extruder, stranded, and pelletized. The high shear extrusion compounding process leads to significant fiber breakage. The length reduction decreases the reinforcement efficiency of the fibers. Experiments are described and the literature is reviewed, which characterize fiber length reduction in conventional processes. Fiber fracturing and attrition during processing are caused by stressed induced on the fiber by the melt flow conditions and stresses resulting from fiber‐fiber and fiber‐surface interactions. Fiber breakup is significant in recycling of fiber‐reinforced thermoplastics. Fiber attrition and fracture during melt compounding and subsequent melt processing operations are important phenomena that determine the final composite properties. In order to overcome this limitation, long‐fiber‐reinforced thermoplastics (LFT) have been developed to yield better mechanical properties and to meet the market demand by improvement of the reinforcement efficiency. This article reviews theoretical and experimental studies dealing with fiber breakage during melt flow compounding and processing of fiber‐reinforced thermoplastic composites.