Epoxy resins are increasingly finding applications in the field of structural engineering. A wide variety of epoxy resins are available, and some of them are characterized by a relatively low toughness. One approach to improve epoxy resin toughness includes the addition of either a rigid phase or a rubbery phase. A more recent approach to toughen brittle polymers is through interpenetrating network (TPN) grafting. It has been found that the mechanical properties of polymer materials with an IPN structure are fairly superior to those of ordinary polymers. Therefore, the present work deals with epoxy resin toughening using a polyurethane (PU) prepolymer as modifier via IPN grafting. For this purpose, a PU prepolymer based on hydroxyl-terminated polyester has been synthesized and used as a modifier at different concentrations. First, the PU-based hydroxyl-terminated polyester has been characterized. Next, an IPN (Epoxy-PU) has been prepared and characterized using Fourier transform infrared (FTIR) spectroscopy, thin-layer chromatography (TLC), and scanning electron microscopy (SEM) prior to mechanical testing in terms of impact strength and toughness. In this study, a Desmophen 1200-based PU prepolymer was used as a modifier at different concentrations within the epoxy resin. The results also showed that, further to the IPN formation, the epoxy and the PU prepolymer reacted chemically (via grafting). Compared to virgin resin, the effect on the mechanical properties was minor. The impact strength varies from 3-9 J/M and K-c from 0.9-1.2 MPa m(1/2). Furthermore, the incorporation of a chain extender with the PU prepolymer as a modifier into the mixture caused a drastic improvement in toughness. The impact strength increases continuously and reaches a maximum value (seven-fold that of virgin resin) at a modifier critical concentration (40 phr). K-c reaches 2.5 MPa m(1/2) compared to 0.9 MPa m(1/2) of the virgin resin. Finally, the SEM analysis results suggested that internal cavitation of the modifier particles followed by localized plastics shear yielding is probably the prevailing toughening mechanism for the epoxy resin considered in the present study.