This experimental study explored the impact of varying weight proportions (5%, 10%, 15%, and 20%) of cotton fiber reinforcement in epoxy composites on compressive strength, Charpy impact strength, and water absorption characteristics. Concurrently, the interfacial properties were examined using Scanning Electron Microscopy (SEM). The inclusion of 15 wt.% cotton fiber notably enhanced compressive strength, displaying consistent improvement as cotton content increased until reaching 15 wt.%. Beyond this point, further increases yielded diminishing enhancements in compressive properties. EC20 demonstrated superior impact strength and energy absorption. Increased cotton concentrations improved impact properties due to the fibrous nature of cotton, enhancing energy dissipation and crack resistance within the epoxy matrix. Higher cotton content correlated with increased water absorption, aligning with cotton’s hydrophilic properties. The EC20 composite exhibited heightened water uptake and permeability, indicating the influence of elevated cotton concentrations. SEM analysis of fracture surfaces identified crucial features such as fiber pull-out, matrix cracking, interfacial debonding, and surface irregularities. These findings contribute significantly to understanding the inherent failure mechanisms in these composite materials.