Phenolic epoxy resin was toughened by carboxyl-randomized butadiene acrylonitrile copolymer (CRBN) for use as composite matrix. By adding different parts of butadiene acrylonitrile copolymer (BN-26, without carboxyl contained) to CRBN, different sizes of rubber domains and different numbers of chemical bondings between the resin matrix and the rubber phase were obtained. It is found that small rubber particles (less than 0.1 μm) are cavitated during the crack development. The interaction between secondary crack zones caused by the cavitation makes the fracture toughness KIC of the materials high; by comparison, a local stress-whitened zone is produced in the material with large rubber particles (more than 0.1 μm) when it is subjected to tensile stress. In this case, the flexure strength σf of the material is great. Using ultrasection and TEM techniques, the stress-whitened zone was shown to be caused by the special multiple-phase structure of the material, in which many caves and “macrocrazes” coexist.