Abstract: A process for producing a highly reactive low-viscosity modified phenolic resin comprising the steps of polycondensating a petroleum heavy oil or pitch, a formaldehyde polymer, and a phenol in the presence of an acid catalyst to prepare a modified phenolic resin; and reacting the resultant modified phenolic resin with the phenols at a temperature higher than 120.degree. C. and not more than 200.degree. C. in the presence of the acid catalyst to lower the molecular weight of the modified phenolic resin. The highly reactive low-viscosity modified phenolic resin obtained according to this process has high reactivity with epoxy resins and low resin melt viscosity. In addition, this resin can be used for producing a molding material having good moldability and considerably low moisture absorption when combined with an epoxy resin.