Five blend samples of cardanol-based epoxidized novolac resin containing varying concentrations of carboxyl-terminated poly(butadiene-co-acrylonitrile) (CTBN) ranging between 0 and 25 wt % with an interval of 5 wt % were prepared. The epoxidized novolac resin (ECF) was synthesized from the epoxidation of cardanol-based novolac-type phenolic resin (CF) with molar excess of epichlorohydrin (i.e., about 10 mol at 120 degrees C in basic medium). The CF resin was synthesized with a molar ratio of 1 : 0.5 of CF using dicarboxylic acid catalyst such as succinic acid at 120 degrees C for 5 h. The pure epoxy and its blend were cured with stoichiometric amounts of polyamine curing agent. The formation of various products during the synthesis of cardanol-based novolac resin, epoxidized novolac resin, and blending of epoxidized novolac resin with CTBN have been studied by Fourier transform infrared (FTIR) spectroscopic analysis. Further, a reaction mechanism for the step-growth reaction was proposed on the basis of the results of FTIR analysis. Also, the structures of CF and ECF were proposed on the basis of the results of nuclear magnetic resonance and MALDI-TOF mass spectroscopic analysis along with gel permeation chromatographic (GPC) analysis. GPC analysis resulted in M-n of 670 gmol(-1). The blend sample having 15 wt % CTBN concentration showed minimum cure time, whereas the presence of CTBN in blend systems showed marginal change in the values of Delta H. A clear-cut two-step mass loss in dynamic thermogravimetric trace of unmodified and CTBN-modified systems was observed. Thermal stability of the blend sample containing 15 wt % CTBN into the pure epoxy resin was the highest among all other prepared systems. (C) 2009 Wiley Periodicals, Inc. J Appl Polym Sci 114: 1471-1484, 2009