Flexible epoxy resin was used as an interphase matrix to improve the transverse properties of carbon fiber reinforced plastic (CFRP) laminates. The use of flexible interphase is considered to act as the energy absorber and prevent the fiber/matrix interface cracking. The purposes of the present study are fabrication and characterization of CFRP laminates with flexible interphase. The effect of the flexible interphase on the damage tolerance of CFRP laminates was investigated. It was confirmed that transverse strength was improved and transverse crack progress was suppressed in the laminates with flexible interphase.