Abstract: Epoxy resins of increased functionality are prepared by branching the epoxy resin in the presence of a lithium or cesium compound as a branching catalyst until the desired functionality is obtained and thereafter terminating the branching reaction. Since the lithium and cesium compounds are not deactivated by the aliphatic chloride typically found in an epoxy resin, the branching reaction can effectively be conducted even at low concentrations of the lithium or cesium compound. Termination of the branching reaction is conducted by cooling the branching reaction mixture or by the addition of a deactivating agent which stops or effectively reduces the rate of the branching reaction. Due to the low concentration at which the branching catalyst can be employed, the resulting branched epoxy resins can be prepared without visible turbidity.