A novel epoxidized soybean oil-toughened-phenolic resin (ESO-T-PR) has been synthesized by etherification graft and multi-amine curing ESO. Fourier transform infrared spectroscopy (FTIR) was adopted to investigate its molecular structure and scan electron microscope (SEM) was used to observe the micro morphology of its impact fracture surface. This ESO-T-PR was adopted as the matrix resin to prepare paper copper clad laminate (P-CCL) and the properties of resulting P-CCL are found superior to the related Chinese National Standard. The toughing mechanism was investigated by comparing the impact strength, solderleaching resistance, flexural strength, peeling strength and morphology of this ESO-T-PR with those of other two ESO modified phenolic resins. It is demonstrated that during the synthesizing process of ESO-T-PR, the phenol hydroxyl is etherified by ESO or ESO epoxy resin prepolymer (ESO chain extension polymer) and the long ESO epoxy resin chain segments enhance the crosslink density of ESO-T-PR and consequently improve the impact toughness and solderleaching resistance of P-CCL made of ESO-T-PR. The ESO-T-PR is a cheap matrix resin with excellent properties to make P-CCL (electric guide board).