Acrylic monomers and free-radical initiators were dispersed in an aqueous urea-formaldehyde (UF) suspension and polymerized in situ to afford a suspension containing 5 wt % thermoplastic (5 g of thermoplastic/100 mL of suspension). The viscosity of the thermoplastic-modified UF suspension (65 wt % solids at 25 degrees C ranged from 240 to 437 cP versus 121 cP for the unmodified UF control. Wood-flour composites (sugar maple and 50 wt % adhesive) were prepared with thermoplastic-modified UF suspensions and cured with the same cycle used for the composites prepared with the unmodified UF adhesive (control). The effect of the thermoplastic-modified UF adhesive was evaluated on the notched Izod impact strength and equilibrium moisture uptake of the wood-flour composites. The notched Izod impact strength of the composites prepared with modified UF adhesives increased by as much as 94% above that of the control. The increase depended on the initiator and the monomer composition. The modification affected the equilibrium moisture uptake and rate of moisture uptake in the wood-flour composites. Preliminary results for particleboard prepared with 10 wt % modified UF adhesive (5% thermoplastic in the UF resin) and unoptimized cure conditions confirmed a significant effect of the thermoplastic modification on both the internal-bond strength and thickness swelling of the particleboard. (c) 2007 Wiley Periodicals, Inc.