This paper describes the role of Polyhedral Oligomeric Silsesquioxane (POSS) nanomaterials in improving the oxidation resistance of carbon-carbon composites by matrix modification. It is expected that POSS containing composites will have improved oxidation resistance because, in a severely oxidizing environment, silicon and oxygen of the POSS oxidize to form silicon dioxide. Since silicon ceramics exhibit the most attractive thermal expansion compatibility with carbon composites, the protective silica layer will prevent the oxidation of the composite without adversely affecting its performance. Two types of POSS, octaisobutyl POSS (OIBP) and trisilanol phenyl POSS (TSPP) are incorporated in phenolic resin and the dynamic mechanical and thermal properties of the resultant composites are studied. POSS incorporated phenolic resin is then used for the preparation of carbon-carbon composites. It is found that in presence of POSS, the thermal stability of the composite is improved both in inert and oxidative environment.