A new class of electrical insulating materials with improved thermal stability was prepared from combination of polybenzoxazine with epoxy terminated polyurethane prepolymer (EPU). EPU was prepared by the reaction of glycidol with NCO-terminated urethane prepolymer. The prepolymer was prepared from polycaprolactone polyol (molecular weight 1000), and hexamethylene diisocyanate. Bisphenol-A and aniline were used for preparation of benzoxazine monomer. Mode of reactions and optimum curing condition were determined by DSC and FTIR analysis. Upon these analysis as well as DMTA findings, formation of interpenetrating polymer networks was suggested for blends consisted different weight ratios of two components. Viscoelastic behavior, mechanical, thermal, and electrical properties of the prepared samples was studied and their relation to the chemical structure and composition of blends were elucidated.