We experimentally report material design of halloysite nanotube (HNT)/epoxy composites, focusing on the effects of HNT concentration on thermal and mechanical properties, especially fracture toughness, of diverse epoxy composites with as-received and phenylphosphonic-acid (PPA)-treated HNTs prepared by mechanical mixing or ball-milling homogenization. It is demonstrated that, with HNT added in the region of 0.0–10.0 wt. %, significantly reinforced fracture toughness of the epoxy composites can be achieved. The epoxy composites prepared by ball-milling homogenization have much more uniform HNT size and dispersion than those prepared by simple mechanical mixing, enhancing their fracture toughness. The morphology of treated HNTs changes from nanotubes to nanoplatelets; as a result, with a substantial increase in the total contact area between HNT and epoxy and enhancing the fracture toughness of epoxy composites. This higher HNT concentration and the higher fracture toughness are achieved for various epoxy composites. However, the optimal concentration of HNT is 5.0 wt. % in this study. The addition of further HNT achieves only marginal fracture toughness enhancement and more negative effects appear, such as HNT concentration gradient in cured epoxy composites, high potential decrease in glass transition temperature (Tg), and potential immature tensile failure.