Purpose - The purpose of this paper is to evaluate the improvement of mechanical and thermal properties of cured epoxy modified with amine functional chloroaniline formaldehyde condensate (AFCFC) and to determine the optimum level of modification. Design/methodology/approach - To evaluate toughening, different compositions were made by adding various concentration of AFCFC to epoxy. The impact, adhesive, tensile and flexural strengths of the modified and the unmodified epoxy were characterised by dynamic mechanical analysis, Thermogravimetric properties of modified epoxy were also reported. Findings - The modification of epoxy resin using AFCFC showed significant enhancement of mechanical strength over unmodified epoxy. The reason behind this is that, in the initial stage of curing, the AFCFC are miscible with the epoxy and form a homogeneous solution. This homogeneity promotes the chemical reaction and network formation. During the curing process, as the molecular weight increases, the component separates within the reaction medium to form a second dispersed phase. Research limitations/implications - The toughening agent AFCFC has been synthesised by using chloroaniline and formaldehyde. By changing amine and aldehyde, other toughening agents could be synthesised and the efficiency of modification of epoxy resin using these could also be studied. Originality/value - AFCFC modified epoxy could be used in the field of coating, casting, adhesives, potting and encapsulation of semiconductor devices.