Abstract: A phenolic resin obtained by reacting a phenol with an aromatic aldehyde and a xylylene compound represented by the formulaROH.sub.2 C(C.sub.6 H.sub.4)CH.sub.2 ORwhere R is hydrogen, an alkyl group having a carbon atom number of 1-4, or an acyl group having a carbon atom number of 2-4 in the presence of acid catalyst, with the sum of aromatic aldehydes and xylylene compounds to phenols molar ratio being 0.1-0.95, and the xylylene compounds to aromatic aldehydes molar ratio being 0.1-1.4.The phenolic resin thus obtained is useful as an industrial material by virtue of its excellent moisture resisting property, alkali resistance and fair thermosetting property. Having low moisture absorption ratio and high glass transition temperature, this phenolic resin is also suitable used as hardener for semiconductor encapsulating epoxy resin which has excellent package crack resistance after solder dipping and high reliability.