The brittle nature of epoxy polymers is one of their main drawbacks, preventing their widespread applications. In this research article, a new modifier with an extremely toughening effect on brittle epoxy was developed. It was found that introducing low-molecular-weight polyethylene glycol (PEG) in the low amounts (up to 10%) into epoxy matrix considerably improves the impact and fracture properties of epoxy thermosetting polymer without attenuating its tensile properties. Epoxy/PEG hybrid containing 10% PEG exhibited an impact strength of 56.3 kJ/m2 which is 5.7 times greater than that of pristine epoxy. The fracture strength of 7.7 MPa m1/2 with 540% increase compared to pure epoxy was also observed for the hybrid material. Morphological, chemical, and thermal properties of epoxy/PEG hybrid were studied using scanning electron microscopy, Fourier transform infrared spectrometry, and differential thermal analysis, respectively, to find out the basic reasons behind such a considerable improvement. A new morphology, consisting uniformly dispersed PEG nanoparticles in the epoxy matrix, was observed for the modified hybrid. This unique morphology for epoxy/PEG was named as nanoblend. The results showed that the formation of nanoblend morphology with strong interaction between epoxy and PEG in the blend structure is responsible for epoxy toughness. POLYM. ENG. SCI., 54:1833–1838, 2014. © 2013 Society of Plastics Engineers