A modified epoxy composition for filament winding of pressure vessels was investigated. The system consisted of a DGEBA-type DER 332 epoxy resin, an aliphatic amine T-403 hardener, and an amine-terminated ATBN 1300X16 toughening agent. The design goal was to achieve a toughened system, with processing characteristics suitable for filament winding. The product should have an improved fracture toughness, with minimal sacrifice of its thermal and mechanical properties and general performance. Specifically it was sought to develop a composite material laminate in which the damaged zone caused by a high-energy penetrating impact is localized. The selected epoxy system was investigated in its bulk state with respect to its theological, thermal, mechanical, and morphological behavior. Further testing included adhesive shear strength, composite tensile and shear strength, and fracture analysis. The ATBN modification of the epoxy system achieved most of the design objectives including pot life, glass transition temperature and ductility of the bulk epoxy, and improved fracture mechanism, with minimal sacrifice of the mechanical properties of the composite. This was achieved because of the ATBN contribution, both as a crosslinking agent and as a toughener. Morphological studies revealed the presence of a rubbery globular phase of 1 mu m diameter, dispersed uniformly in the epoxy matrix, which was formed when ATBN was added. Fractured composite specimens showed that a better interfacial adhesion of the matrix to the fibers was achieved in the modified formulation.