An analysis is made of the thermodynamic and kinetic factors affecting phase separation in blends of di-, tri- and tetrafunctional epoxy resins, cured with either diaminodiphenylsulfone (DDS) or with dicyanodiamide (Dicy), and modified with either poly(ethersulfone) (PES) or carboxyl-terminated butadiene acrylonitrile (CTBN) rubber. The applicability and limitations of the solubility parameter approach in predicting compatibility in reactive blends are considered.