In situ radical polymerization method, which is a method for toughening thermosetting resins by modifier polymers radically generated in the curing system of the resins, was applied to epoxy resin for the matrix of carbon fiber reinforced plastic (CFRP) to achieve both high fracture toughness of the cured resin and low viscosity of the resin composition. Benzyl methacrylate (BzMA) and poly(ethylene glycol) methyl ether methacrylate (PEGMEMA) were selected as the modifier monomers, and the resulting cured epoxy resin having co-continuous phase separation with the polymerized modifier at a nanometer level showed 2.1 times higher fracture toughness (K-IC) than the unmodified cured resin. The modified epoxy resin system was then successfully applied to the fabrication of CFRP by resin transfer molding (RTM) due to its low viscosity in the uncured state. The resultant CFRP system showed 30% increase of the interlaminar fracture toughness (G(IC)) from the unmodified system.