Physical characterization of a liquid crystalline epoxy resin used as a matrix in the fabrication of carbon fiber composites is presented. Curing reactions, evaluated by means of calorimetry, indicate differences from those of conventional epoxies. The presence of fibers does not influence the reaction rate. Dynamic-mechanical characterization and fracture resistance of composites are discussed and compared to those of conventional resins. The outstanding toughness of the composites prepared with the liquid crystalline resin has been explained on the basis of a biphasic nature of the cured thermoset.