Copolyesters based on poly(butylene terephthalate) (PBT) and a bio-based fatty acid dimer diol (FADD) were prepared by solid-state modification (SSM). The chemical incorporation of the FADD into the backbone of the PBT was proven using various techniques. It was clear that the incorporation rate was diffusion-limited rather than reaction-limited. From quantitative 13C NMR a nonrandom chemical microstructure was obtained at all compositions. Moreover, differential scanning calorimetry (DSC) and small-angle X-ray scattering (SAXS) revealed a morphology of stacks of lamellar PBT crystals with amorphous regions that display microphase separation between the PBT-rich chain segments and the FADD-rich chain segments. This microphase separation is strongly dependent on the composition of the copolyester and was clearly demonstrated by the presence of two Tgs in copolyesters with FADD contents exceeding 10 wt %. SAXS revealed that especially at a FADD content of 41 wt % a strongly microphase-separated morphology was obtained.