The work aims to improve the toughness of hydantoin epoxy resin by incorporating carboxyl-terminated liquid nitrile rubber (CTBN). CTBN of different amounts were added to the hydantoin epoxy resin through the melt-blending method. The modified epoxy resin was prepared with 4,4'-diaminodiphenylmethane as the curing agent. The curing process was determined by studying the curing kinetics. The effects of CTBN content on the reaction activity, mechanical properties, thermal properties, and cross-sectional microstructure of the modified resin system were investigated in detail. The results showed that the addition of CTBN shifted the curing exothermic peak of the modified resin towards the direction of higher temperature, and CTBN significantly improved the fracture elongation and impact strength of the resin system, while the thermal properties remained relatively unchanged. The cross-sectional microstructure of the modified resin exhibited a two-phase "island" structure. In conclusion, CTBN has a significant toughening effect on hydantoin epoxy resin, and the resulting modified resin system can be used for metal corrosion-resistant coatings and adhesives.