The morphologies and tensile properties of an elastomer-modified epoxy (EME)/polycarbonate (PC) binary system and an EME/diglycidyl ether of bisphenol A (DGEBA)/PC ternary system were examined. In the EME system, a continuous elastomer-rich phase formed, while in the EME/DGEBA systems (unblended with PC), a continuous epoxy-rich phase formed. In both of these systems, two-phase structures were observed. In contrast, a microdispersed structure was observed when the PC was blended with either the EME or with the EME/DGEBA systems. It is suggested that blending of the epoxy with PC caused an increased solubility of the former into the elastomer phase. The tensile strength and tensile elongation of both the EME and EME/DGEBA systems were improved by blending with PC. In the EME/PC blend, the tensile elongation reached its maximum value (60%) at a PC content of approximately 10 p.h.r. (parts per hundred resin by weight), with this maximum being approximately one and a half times higher than that of the unblended EME. Tensile strength was also clearly increased by blending with small amounts of PC, but soon reached a steady value. In the EME/DGEBA/PC blends, the tensile properties were dependent on the weight ratio of EME to DGEBA. In the absence of PC, as this ratio increased, the tensile elongation also increased, while at the same time the tensile strength decreased. The tensile properties were also improved in this system, by blending with PC. From the results obtained, it was clear that the improvement in tensile properties was closely related to the changes in morphology. Therefore, blending of the PC induced a microdispersed structure and improved the elongation of the epoxy resin.