A biphenol-type epoxy resin, which had a mesogenic group in the backbone moiety, was modified with carboxy-terminated butadiene acrylonitrile copolymer (CTBN) as a reactive elastomer, and its fracture toughness was measured. With the addition of CTBN, the fracture toughness of the biphenol-type epoxy resin significantly increased and became significantly higher than that of a bisphenol A-type epoxy resin modified with CTBN. The network chain orientation in the cured biphenol-type epoxy resin system was clearly observed during the fracture process with polarized microscopy Fourier transform infrared measurements, although such a phenomenon was not observed in the bisphenol A-type epoxy resin system. The high toughness of the cured biphenol-type system was clearly due to the consumption of the mechanical energy by a large deformation of the matrix resin due to the orientation of the network chains during the fracture process. (C) 2003 Wiley Periodicals, Inc.