Silsesquioxanes are formed in situ during mixing and curing of a phenolic resin and a molecular silane precursor (3-(triethoxysilyl)-1-propaneamine) yielding a nanocomposite. As indicated by a higher onset temperature, a higher characteristic decomposition temperature, and a lower maximum heat flow, the thermal stability of the nanocomposite is significantly improved over the pristine resin. Moreover, the bending strength and the strain at break could also be enhanced by 36% and 51%, respectively. The nanocomposite was characterized by Si-29 solid-state NMR, STEM/EDS, TGA, DSC, and three point bending tests. The STEM/EDS measurements showed a homogenous distribution of silsesquioxanes in the phenolic resin. (C) 2010 Wiley Periodicals, Inc. J Appl Polym Sci 117: 2272-2277, 2010