A novel terphenyl liquid crystalline (LC) epoxy resin was synthesized and characterized by 1H-NMR, Fourier transform infrared spectroscopy, differential scanning calorimetry (DSC), and polarizing optical microscopy. Depending on the curing temperature, the synthesized resin formed both smectic and nematic LC phases. A time-temperature-transformation diagram was constructed to optimize the curing process, which helped in the preparation of LC and isotropic system. The terphenyl epoxy resin obtained exhibited higher acid resistance than a comparable Schiff-base epoxy resin, and also displayed excellent fracture toughness. © 2014 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 2015, 132, 41296.