In this research, epoxy toluene oligomer (ETO) was synthesised from toluene and epichlorhydrin, which was used as co-matrix in 50 wt.% with commercial epoxy resin (ER). Its chemical structure was characterised with FTIR spectroscopy and chemical analyses. ETO was found as an effective flame retardant for ER. Modification of ER with ETO in 50 wt.% increased percentage elongation at break of neat ER about 67 times. The rigid filler used in epoxy polymer matrix was the modified and unmodified sepiolite. The appropriate sepiolite amount in all cases was determined to be 5 wt.%. Scanning electron microscopy (SEM) was used for characterisation of surface and cross sections of the composites to verify the results. Modification of sepiolite increases the T 5, T 10, and T 50 of neat ETO-ER by 10, 7, and 5°C, respectively. Surface hardness and tensile strength of all composites were higher than those of neat ETO-ER polymer matrix. ETO-ER/modified sepiolite coating showed the best adhesion results and exhibited perfect resistance to 3% NaCl and 10% NaOH solutions. © 2012 Elsevier B.V. All rights reserved.