Poly(urethane acrylate)/poly(glycidyl methacrylate-co-acrylonitrile) core-shell composite particles were prepared using two-stage emulsion polymerization. Composite particle sizes were varied from 48 to 200 nm by introducing polyoxyethylene groups into the urethane acrylate molecules. The morphology of the two-stage composite latex was inferred using surface energy measurements and titration of the emulsion. In the two-stage latex, which was prepared using relatively small core particles (about 40 nm), an inverted core-shell morphology was obtained. It was believed that the high polarity of the core surface and the low stage ratio of core to shell made the core-shell morphology more unstable thermodynamically. When the core of the two-stage latex was more crosslinked, the morphology was perfectly prevented from inverting because a higher kinetic barrier between the core-shell and inverted core-shelf structures was achieved. The impact strength of the modified epoxy resin increased with the decrease of composite particle sizes and the increase of the shell thickness. In particular, when the average size of the composite particle was 50 nm and the stage ratio was 70/30, the impact strength of the modified epoxy resin increased more than 20 times compared to that of pure epoxy resin.