Dendritic polymers have attracted increasing attention in the field of epoxy resin toughening. This paper is the first report of the use of a novel dendritic polysiloxane (DPSO) bearing high epoxide groups to modify the diglycidyl ether of bisphenol-A (DGEBA). The thermal properties, toughness and morphology of the cured epoxy resins were examined by DSC, TGA, impact testing and SEM. The chemical structure of DPSO was confirmed by FTIR, $^{29}Si$ NMR and GPC. The $T_g$ increased by approximately $7^{circ}C$ after introducing the DPSO. The TGA results under $N_2$ and air atmospheres showed that the initial degradation temperature for 5% weight loss ($T_d$5%), temperature for 50% weight loss ($T_d$50%) and residual weight percent at $800^{circ}C$ ($R_{800}$) all increased after introducing DPSO. Moreover, the addition of 3 phr DPSO100 resulted in a 70.4% increase in impact strength compared to that of the neat epoxy. The morphology of the fracture surfaces shows that the miscibility of polysiloxane with epoxy resin increased with increasing number of epoxy groups in DPSO, and the improved toughness was attributed to the rubber-bridged effect. The high number of epoxy groups in dendritic polysiloxane can react during the curing process, and participate chemically in the crosslinking network. DPSO is expected to improve significantly the toughness and thermal stability of epoxy resin.