Styrene-block-butadiene-block-styrene (SBS) triblock copolymers epoxidized at several epoxidation degrees by hydrogen peroxide in water/dichloroethane biphasic system were blended with epoxy based on diglycidyl ether of bisphenol A (DGEBA) and DDM (4,4'-diaminodiphenyl methane) as curing agent. The incorporation of epoxidized block copolymers in epoxy resulted in the formation of nanostructured blends. The morphologies of the blended polymers were studied using field emission scanning electron microscopy (FESEM), transmission electron microscopy (TEM), and small-angle X-ray scattering (SAXS) analysis. The key factor controlling the morphology is the mole percentage of epoxidised butadiene units in SBS. In fact, the morphologies changed from macroscopic phase separated domains in unmodified SBS to nanostructured domains in epoxidised SBS and the resulting morphologies were fixed by the cross-linking reaction. Nanostructured morphologies such as worm-like and spherical micelles (radius 8 nm) were generated due to reaction induced phase separation of PS phase followed by the self-assembly of PB sub chains. The mechanical properties such as fracture toughness (stress field intensity factor (K-IC)), and impact strength of these blended systems were measured. It was established that nanostructured blends significantly improved fracture toughness and impact strength. Field emission scanning electron micrographs of fractured surfaces were examined to understand the toughening mechanism