AbstractHydroxy‐terminated poly(arylene ether nitrile) oligomers with pendent tert‐butyl groups (PENTOH) were synthesized by the nucleophilic aromatic substitution reaction of 2,6‐dichlorobenzonitrile with tert‐butyl hydroquinone in N‐methyl‐2‐pyrrolidone medium with anhydrous potassium carbonate as a catalyst at 200°C in a nitrogen atmosphere. The PENTOH oligomers were blended with diglycidyl ether of bisphenol A epoxy resin and cured with 4,4′‐diaminodiphenyl sulfone. The curing reaction was monitored with infrared spectroscopy and differential scanning calorimetry. The morphology, fracture toughness, and thermomechanical properties of the blends were investigated. The scanning electron micrographs revealed a two‐phase morphology with a particulate structure of the PENTOH phase dispersed in the epoxy matrix, except for the epoxy resin modified with PENTOH with a number‐average molecular weight of approximately 4000. The storage modulus of the blends was higher than that of the neat epoxy resin. The crosslink density calculated from the storage modulus in the rubbery plateau region decreased with an increase in PENTOH in the blends. The fracture toughness increased more than twofold with the addition of PENTOH oligomers. The tensile strength of the blends increased marginally, whereas the flexural strength decreased marginally. The dispersed PENTOH initiated several toughening mechanisms, which improved the fracture toughness of the blends. The thermal stability of the epoxy resin was not affected by the addition of PENTOH to the epoxy resin. © 2007 Wiley Periodicals, Inc. J Appl Polym Sci 2007