Mechanical properties (flexural strength, flexural modulus, and notched Izod impact strength), thermal stability, and flame retardance of poly(dimethylsiloxane adipamide) (PDMSA)-toughened novolac type phenolic resin were investigated. Mechanical properties of modified novolac-type phenolic resin increase with PDMSA contents, because the soft segment of PDMSA absorbs the loads in the network of brittle novolac-type phenolic resins. TGA results show that the thermal degradation temperatures are higher than 400 degreesC, and the temperature of 10% weight loss increases with increasing the PDMSA content. The char yield increases with novolac-type phenolic resin content. The morphologies of the fracture surface of the modified novolac-type phenolic resin were investigated by scanning electron microscopy (SEM). Morphological results agree with those from mechanical properties of the modified novolac-type phenolic resin. The modified novolac-type phenolic resin also shows excellent flame retardance that is UL-94, V-l, and the limited oxygen index is higher than 35.