In this work, two different cardanol based epoxies (Cardolite NC‐514 and Cardanol NC‐547) were employed as flexibilizers to toughen an epoxy novolac resin namely, poly[(phenylglycidyl ether)‐co‐formaldehyde] (PPGEF). 4,4′‐Diamino‐3,3′‐dimethyl dicyclohexyl methane (BMCHA) was used as a curing agent. Differential scanning calorimetry and dynamic mechanical thermal analysis of the composites showed a gradual decrease in glass transition temperatures (Tg) with increase in cardolite content confirming the incorporation of flexible moieties into the brittle resin matrix. Improvement in toughening of PPGEF/Cardolite composites was manifested by increase in the izod impact strength of both the composites. The tensile strength increased marginally for composites with increasing amount of Cardolite NC‐514 but decreased for the composites containing Cardolite NC‐547. This was attributed to the lack of rotational motion in the chain due to close proximity of rigid phenyl rings in NC‐547. SEM of the cryo‐fractured surfaces of composites showed good compatibility between PPGEF and cardanol based flexibilizers. © 2015 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 2016, 133, 43318.