The cure process and the mechanical properties of liquid polymethylmethacrylate grafted natural rubber (LMG30) modified epoxy have been studied. Addition of LMG30 significantly increased the fracture toughness and the impact strength of the epoxy resin. The fracture toughness increased up to 22 fold (17.3 MNm-3/2) when modified with 5 phr LMG30. The glass transition temperature however, decreases as the rubber content increases. The SEM analysis shows uniform dispersion of rubber particles within the epoxy matrix with average particle size between 0.4 to 0.8 0m in diameter.