Epoxy telechelic polyisobutylenes (EP-PIB-EP), potentially useful to obtain flexible epoxies, were synthesized by reacting bromoallyl end-functional PIE with glycidol in the presence of NaH. The epoxy end-capped macromonomers were mixed with bisphenol A diglycidyl ether (DGEBA) and triethylenetetramine as curing agent and cured at elevated temperature. Field emission scanning electron microscopy (FESEM) indicated nanophase segregation of rubbery domains at EP-PIE-EP <= 15 wt %, and the fracture toughness increased by 100% relative to the unmodified epoxy network, while the tensile and flexural strengths remained adequate. However, at EP-PIB-EP >= 20 wt % macrophase separation resulted in a drastic reduction in toughness along with other mechanical properties. Use of oligo(tetramethylene oxide) modified epoxy telechelic PIE (EP-oTHF-PIB-oTFIF-EP) as soft segment significantly improved the miscibility, and cured materials with excellent fracture toughness were obtained even at 40 wt % rubber content Thermal stability of the amine cured epoxy resin was not affected by the incorporation of PIE. These flexible networks possess superior mechanical properties compared to poly(ethylene glycol)/DGEBA networks commercialized by Dow Chemical Company.