We present a simple procedure for preparation of core shell poly(dimethylsiloxane)–epoxy microspheres (CPR) by suspension polymerisation route and demonstrate its potential as effective toughener for thermosetting epoxy resin. The curing of siloxane macromonomer was performed in the presence of platinum based hydrosilylation catalyst and the effect of reaction parameters on the dimensions of the polydimethylesiloxane (PDMS) based elastomeric microspheres was quantified, which could be varied from 90 to 216 μ. CPR were prepared by coating the PDMS core with epoxy resin in an additional step. Composites containing varying amounts of microspheres (3–10 % w/w) were prepared and the effect of their incorporation on quasi-static as well as dynamic properties of epoxy resin was evaluated. The glass transition temperature of the unmodified epoxy was unaltered on blending with elastomeric microspheres, which indicated its existence in a well separated phase. The presence of an epoxy coating on the silicone core led to improved dispersion in the epoxy matrix, which was evident from higher impact strength and fracture energies(GIC) as compared to its uncoated analogues. The charpy impact strength and GIC increased by 148 % and 70 % respectively on introduction of 5 % CPR. This was however accompanied with a reduction in the tensile modulus and strength of the base epoxy. Excellent agreement was found between the experimentally measured modulae and the predictions made on the basis of Halpin Tsai and Lewis-Neilson models. Post-mortem morphological studies of the fracture surfaces revealed the presence of spherical cavities which substantiate the role of rubber cavitation as the primary toughening mechanism in microsphere toughened epoxy composites.