Blend samples were prepared by physical mixing of resole-epoxy blend with carboxyl-terminated polybutadiene (CTPB) liquid rubber ranging between 0 and 25 wt% in the interval of 5 wt%. Resoles were synthesized with phenol and various alkyl phenols. The blends were cured with 40 wt% polyamide. The structural changes during the curing were investigated by infra-red spectroscopic analysis. The presence of CTPB in resole-epoxy blends did not affected the values of cure times and Delta H whereas the gel time decreased up to 15 wt% addition of CTPB in the blends. The blend systems containing p-cresolic resole, epoxy and CTPB showed minimum gel time amongst all other blend samples. A clear-cut two-step mass loss in thermogravimetric (TG) trace of unmodified and CTPB-modified systems was observed. The mechanical properties of the blend samples were found to be affected by the CTPB addition. The plane strain fracture toughness (K-IC) values of CTPB-modified matrix resins were greater that that for the unmodified resole/epoxy blends. This was further verified by scanning electron microscopic (SEM) analysis.