Modification of epoxy resins for improvement of adhesion has been the subject of intense research throughout the world. Unlike for thermoplastics, physical blending is not successful for improvement of bond strength and impact strength of epoxy resins. The bond strength of an epoxy resin can be improved only by chemical modification with a suitable flexible modifier. Such chemical modification may either plasticize the epoxy matrix or lead to a two-phase microstructure. Both methods of chemical modifications are discussed critically in the present review.