Thermotropic hydroxyethyl cellulose acetate (HECA) was totally miscible with uncured epoxy resin, and the miscibility was not influenced by the degree of substitution (DS) of HECA. When the epoxy resin was cured with diamine (DDA), HECA became immiscible with the epoxy resin matrix, and a heterogeneous system was formed. Epoxy resin existed as a constant phase, and HECA-rich domains were dispersed in the matrix with dimensions of about 0.2-0.5 mu m. Epoxy resin could be toughened by HECA, and the impact strength of the epoxy resin blends with 10 wt % HECA was the maximum. HECA exhibited the highest toughening ability when the epoxy resin was cured at the temperature at which the HECA existed as a liquid crystalline state. The toughening ability was also influenced by the degree of substitution for acetyl of HECA, and the impact strength of the epoxy resin blends decreased with increasing the DS for acetyl of HECA.