Unsaturated polyester resins (UPRs) are used widely in the fiber-reinforced plastics (FRPs) industry. These resins have the disadvantages of brittleness and poor resistance to crack propagation. In this study, hybrid polymer networks (HPNs) based on UPR and epoxidized phenolic novolacs (EPNs) were prepared by reactive blending. A HPN is composed of a backbone polymer containing two types of reactive groups that can take part in crosslinking reactions via different mechanisms. EPNs were prepared by glycidylation of novolacs using epichlorohydrin. The novolacs had varying phenol: formaldehyde ratios. Blends of unsaturated polyester with EPN were then prepared. The physical properties of the cured blends were compared with those of the control resin. EPN shows good miscibility and compatibility with the resin and improves the toughness and impact resistance substantially. Considerable enhancement of tensile strength is also noticed at about 5% by weight of epoxidized novolac resin. TGA, DMA, and DSC were used to study the thermal properties of the toughened resin and the fracture behavior was studied using SEM. The blends are also found to have better thermal stability. Blending with EPN can be a useful and cost-effective technique for modification of UPR. (c) 2006 Wiley Periodicals, Inc.