The morphology and fracture toughness of epoxy resins modified with amino-terminated polydimethylsiloxane (ATPDMS), differing in their molecular weight, and the degree of the preliminary reaction in the melt state were investigated. Tetramethyl biphenol diglycidyl ether (TMBPDGE) was used as the base epoxy resin. The degree of preliminary reaction between epoxy and polysiloxane increased with the decrease of the molecular weight of polysiloxane in the melt state. When the low molecular weight polysiloxane (AT900) was mixed with high molecular weight polysiloxane in the preliminary reaction, the low molecular weight polysiloxane enhanced the compatibility between the epoxy resin and the high molecular weight polysiloxane and produced smaller size and narrow distribution of polysiloxane particles. The small and highly concentrated polysiloxane particles, as determined by scanning electron microscopy improved the fracture toughness of the epoxy resin.