A series of modified epoxy novolac resins (ENRs) were prepared by incorporating dodecyl chain surfactants with polar groups such as amine, carboxylic acid, phenol, resorcinol and benzene sulfonic acid. Except for the case of benzene sulfonic acid, no macrophase separation is seen in any of the modified ENRs. The addition of these dodecyl surfactants to ENR hinders the cross-linking reaction as revealed from their dynamic and isothermal DSC curing measurements and reduced glass transition temperatures (T_g). The cross-link density evaluated from the storage modulus (E′) in the rubbery region using DMTA measurements is found to be low with the addition of surfactants in agreement with their plasticization behavior. The stiffness of the materials obtained at low temperatures showed a moderate increase for ENRs with carboxylic acid and phenol surfactants. Upon heating, their storage modulus drops at low temperatures compared to ENR supporting the mechanism of plasticization in them. This high value of E′ for the plasticized material in the glassy phase is different from the generally known behavior. Such unusually high storage modulus together with increased ‘d’ spacing from the XRD results seems to indicate ‘partial segmental confinement’ of epoxy chains. It is believed that high damping obtained in these two materials is due to ‘partial segmental confinement’ of epoxy chains because of interaction with lauric acid and phenolic surfactants and the associated internal and interfacial friction in them. Dielectric relaxation measurements support the plasticization process based on the high dielectric loss and ionic conductivity in the surfactant modified ENR, as compared to the pristine ones.