In this research water dispersed epoxy varnishes were produced by reacting solid epoxy resin with ethylene diamine (EDA) and maleinized fatty acids of linseed oil. Maleinized fatty acid (MFA) was produced by the maleinization process, in which, fatty acid and maleic anhydride were reacted under nitrogen atmosphere. Maleinization was performed in order to insert hydrophilic groups to the fatty acid chains, which were then inserted to the backbone of the epoxy resin. This was done to give water dispersibility to the hydrophobic epoxy resin. Solid epoxy resin was dissolved in 1,4-dioxane. Ethylene diamine was then added to the solution at 50&deg / C, and stirred for 4 hours. Then the temperature was increased to 80oC and kept for 2 hours. Maleinized fatty acids were then introduced, and the reaction was carried out at 90oC for 10 hours. 1,4-dioxane was used for the removal of the water, which forms as the byproduct. Then the driers were added. The carboxylic groups of the maleinized fatty acid were neutralized by morpholine and the product was dispersed in water. The varnish was applied on test panels and left for air-drying for 24 hours and then baked at 140&deg / C for 5 hours. The free epoxy content was determined by pyridinium-chloride titration and it was seen that all the epoxy groups reacted. Also, produced fatty acid was characterized by FTIR spectroscopy and maleinized fatty acid was characterized by H-NMR and FTIR spectroscopy. Hardness, bending, impact resistance, gloss, and abrasion resistance tests were carried out on hardened varnish specimens. The samples generally showed good mechanical and physical properties. While the baking time was increased the hardness of product increased. Samples showed superior impact resistance, gloss, and flexibility.