Terephthaloyl chloride was reacted with 4-hydroxy benzoic acid to get terephthaloylbis(4-oxybenzoic) acid, which was characterized and further reacted with epoxy resin [diglycidyl ether of bisphenol A (DGEBA)] to get a liquid-crystalline epoxy resin (LCEP). This LCEP was characterized by Fourier transform infrared spectrometry, H-1 and C-13 NMR spectroscopy, differential scanning calorimetry (DSC), and polarized optical microscopy (POM). LCEP was then blended in various compositions with DGEBA and cured with a room temperature curing hardener. The cured blends were characterized by DSC and dynamic mechanical analysis (DMA) for their thermal and viscoelastic properties. The cured blends exhibited higher storage moduli and lower glass-transition temperatures (tan delta(max,) from DMA) as compared with that of the pure DGEBA network. The formation of a smectic liquid-crystalline phase was observed by POM during the curing of LCEP and DGEBA/LCEP blends. (C) 2003 Wiley Periodicals, Inc.