The effect of modification with CTBN on the bonding properties of an epoxy system cured with 1-o-tolylbiguanide (TBG) was investigated and compared with the results of the system cured with ethylene-diamine (EDA). TBG was used as a model of dicyandiamide, which is a typical latent curing agent. The bond strength and toughness of the TBG-cured system increased considerably with the addition of the CTBN modifier, whereas the values for the EDA-cured system were not influenced by the modification. In the former system, cavitation of the CTBN-dispersed phase and plastic deformation of the epoxy matrix were observed in the vicinity of the crack tip. These phenomena were not observed in the EDA-cured system. In addition, the crosslink density of the TBG-cured system was much lower than that of the EDA-cured system. Thus, it was concluded that the high bond strength in the TBG-cured system modified with CTBN is caused by cavitation and also by shear yielding of the low-crosslinked epoxy matrix.