Transesterification has been investigated in poly(epsilon-caprolactone) (PCL)-epoxy blends. In the hot melt process, the hydroxyl on diglycidyl ether of bisphenol-il (DGEBA) monomers is too low to give a noticeable transesterification reaction. In the postcure process, model reactions reveal that the hydroxyls from a ring-opening reaction are able to react with the esters of PCL. In the meantime, the PCL molecular weight decrease and its distribution becomes broader. Nuclear magnetic resonance spectra reveal that fraction of the tertiary hydroxyls converts to secondary hydroxyls. In the cured DGEBA-3,3＇-dimethylmethylene-di(cyclohexylamine)-PCL blend, a homogeneous morphology is achieved. PCL segments are grafted onto the epoxy network after postcuring and result in the lower T-g observed in the differential scanning calorimetry thermogram. A higher transesterification extent also results in broader transition peaks by dynamic mechanical analysis.