The structure and properties of ternary blends of epoxy with poly(ether sulphone) (PES) and carboxyl-terminated butadiene-acrylonitrile rubber (CTBN) have been investigated. In these blends, the phase separation occurs in two stages : a macrophase separation during mixing and a microphase separation during curing. At low PES compositions, the RES-rich spherical domains are dispersed. With increasing PES composition, a co-continuous structure develops and, eventually, the phases are inverted. Regardless of structure change, the modulus and yield stress changes with composition just follow the simple rule of mixtures. However, the fracture toughness of these blends exhibits a synergistic effect. Among the various compositions, 5:5 weight ratio of CTBN to PES exhibited the maximum toughness, which was 140% larger than that calculated from the rule of mixtures. The synergism is believed to be due to the bridging by the RES-rich phase followed by a lowering of the yield stress. The lowering of the yield stress can enlarge the process zone size and the amount of plastic dilatation of the matrix.