Epoxy resin prepared by the reaction of a diglycidyl ether of bisphenol A (DGEBA) and m-xylylenediamine (m-XDA) was modified with 10 wt of epoxidized palm oil (EPO). The EPO was first pre-polymerized with m-XDA at various temperatures and reaction times. The resulting product was then mixed with the epoxy resin at 40 °C and allowed to react at 120 °C for another 3 h. The fully reacted DGEBA/m-XDA/EPO blend was characterized by using scanning electron microscopy (SEM), differential scanning calorimetry (DSC), thermal gravimetric analysis, tensile test, hardness indentation and dynamic mechanical analysis. The SEM study shows that different types of morphology, ranging from phase separated to miscible blends were obtained. A miscible blend was obtained when the m-XDA and EPO were reacted for more than 2 h. The results from DSC analysis show that the incorporation of EPO at 10 wt in the epoxy blend reduced the glass transition temperature (T g). The lowered T g and mechanical properties of the modified epoxy resins are caused by a reduction in crosslinking density and plasticizer effect. © 2012 Springer Science+Business Media, LLC.