Graphene sheets were synthesized through intercalation and subsequent ultrasonic processing of graphite natural flakes. The resultant graphene has been characterized by X-ray diffraction, atomic force microscope and transmission electron microscope, and it was confirmed to be exfoliated into monolayer state. The exfoliated graphene was incorporated into epoxy resins and their mechanical performance was investigated. The critical stress fracture intensity factor, K1c, was calculated based on the three-point bending test, indicating that the toughness was increased by 41% with addition of 0.54 vol % exfoliated graphene in comparison with the neat resin. The tensile tests also suggested that the elastic modulus and tensile strength were increased by 25 and 10%, respectively. The fracture surface of modified epoxy resins was also examined by scanning electron microscope, and it showed typical features of ductile materials. This study provides a cost-effective way to reinforce polymers for engineering applications.