Epoxidized soybean oil(ESO) has been used to toughen epoxy resin cured with ambient temperature hardener, Tris-2,4,6-(N,N-dimethyl amino methyl) phenol. The ESO was prepolymerized with the amine hardener to obtain the liquid epoxidized soybean rubber (ESR). The ESR modified epoxy networks were evaluated for their thermal, impact and adhesion properties. The epoxy/ESR compositions were systematically varied to study the effect of modifier concentration on the adhesion and impact strength. The optimum properties were obtained at a concentration of 20 wt% ESR. The DSC and DMTA analyses indicate phase separation between the epoxy-rich phase and ESO-rich phase.