Novel phenolic type of thermoset resins were synthesized, and their mechanical and toughness properties were evaluated. Phenol Formaldehyde (PF) phenolic resins were modified to broaden their applications for modern composite structures. A first modification consisted of copolymerization of Phenol with Cardanol during the synthesis of resole phenolic (CPF) resins. The modified phenolic resins (CPF) were prepared at various molar ratios of total Phenol to Formaldehyde (F : P ratio) and with different weight ratios of Phenol to Cardanol. CPF resins with a maximum content of 40 wt % of Cardanol were synthesized and used. The CPF resins were applied as a plasticizer and toughening agent to the base PF resins. Both resins (CPF/PF) were mixed in different proportions, and their thermal and mechanical properties were then established. A full miscibility of the two resins was observed with the formation of a single-phase system. An increase in the content of Cardanol resulted in a proportional increase of the flexural strength and fracture toughness together with a decrease of the flexural modulus of the cured CPF/PF resins. Further increased plasticizing and toughening effect was also observed by the blending of the CPF resins with propylene glycol. The higher toughness and flexibility effect of the CPF resins was obtained with a F : P molar ratio equal to 1.25 and with a Cardanol content of 40% (w/w).