The reinforcing effects of native and modified cellulose nanocrystal (CNC) materials on thermosetting epoxies are investigated. CNC modification is conducted by grafting an activated medium chain fatty acid to substitute the hydroxyl functional group. The level and effect of CNC modification are evaluated using Fourier Transform Infrared (FTIR), elemental analysis (EA), thermal analysis, contact angle measurements, and solvent dispersibility studies. The EA shows that CNCs with a degree of substitution (DS) of 0.2, 0.8 and 2.4 is obtained depending on the concentration of the catalyst and reactant used in the process. The native and modified CNCs are then incorporated into epoxy resin via an in situ polymerization. Dynamic mechanical analysis, and stress strain studies showed that the lightly modified CNCs (DS 0.2 and DS 0.8) have an impressive reinforcing effect. CNC with DS 0.2 at 5% loading resulted in a 77% and 44% improvement in the tensile strength and modulus of the baseline epoxy matrix, respectively indicating significant reinforcement. Such materials can be useful in structural composites, printed circuit boards, and adhesive applications. An improvement in the dispersion and an enhanced interfacial adhesion between the modified CNC and the epoxy matrix is proposed for the observed reinforcement. A higher degree of fatty acid grafting onto the CNC resulted in a hydrophobic material, which reduced the water uptake of the epoxy nanocomposites.