In this work, we propose to identify the underlying mechanisms that produce the microstructure and property improvements in these systems. A model epoxy system comprising a DGEBF monomer and diethyltouluene diamine curing agent was modified with a carboxyl-terminated acrylonitrile butadiene (CTBN) elastomer and epoxy-functional nanosilica (20 nm). In rubber-modified thermosets, phase separation of elastomer domains is attributed to the change in Gibbs free energy during cure. Prior to cure, the elastomer is soluble in the matrix (0 < ƒxGm) which results in a one phase polymer containing functionalized silica. As cure progresses, free energy increases so that it is thermodynamically unfavorable for the elastomer to remain miscible in the matrix. An elastomer phase nucleates into particles and grows until the point of vitrification where the second phase morphology no longer changes. Early morphological observations indicate that the nanosilica segregates only in the matrix phase and decreases the general size of the rubber domains. Since morphology is influenced by cure kinetics and the thermodynamics of the system, we carried out DSC isotherms, Near-IR spectroscopy, and cloud point studies to determine these phenomenon. Nanosilica was found to influence both the cure kinetics and pre-cure solubility of the rubber. CTBN and nanosilica independently catalyze the reaction of the epoxy-amine. When combined, the rate of reaction is further increased and significantly reduces the gelation time. Additionally, the presence of nanosilica reduces the solubility of the CTBN in the matrix, therefore inducing more rapid phase separation during cure. Future work will involve the control of pre-cure miscibility and cure kinetics by investigating different curing agents, epoxy-adducted CTBN modifiers, and cure temperature. The eventual goal is to control second phase morphology and relate this to the final properties of the epoxy nanocomposite.