A novel method has been developed to toughen phenolic resin using phenoxy resin. Phenoxy resin was dissolved in phenol to form a glutinous mixture at 110 degrees C, and an acid catalyst (p-toluene sulfonic acid, PTSA) was utilized to reduce the viscosity of mixture. The mixture was blended with resole-type phenolic resin. IR spectra confirmed that the amount and strength of hydrogen bonds increased with PTSA content, and the viscosity decreased with PTSA content in the polymer blends. The wet-out of glass fiber by modified resin was improved. The flexural and notched Izod impact strength of the polymer-blend composites increased significantly.