Abstract: The bisphenol type epoxy resin was modified by lactic acid and succinic anhydride, The influences of the amount of the lactic acid and succinic anhydride on the aqueous dispersion and stability of the product were investigated. The best reactants ratio, the reaction temperature, the time and the catalyst were determined. The structure of the product was characterized by FT-IR, The particle size was measured by dynamic light scattering. The result showed that when n(lactic acid):n(succinic anhydride) :n(epoxy group) between0.15:0.30:1 and 0.20:0.40:1,the product shows good aqueous dispersion ,stability and the minimal particle size.