The initial steps in the formation of phenolic resins have been studied by the performance of molecular orbital calculations. The reactions that have been examined are those occurring between formaldehyde and phenol, under basic and acidic conditions. Energies and electronic distributions were de ter rained theoretically, and it was found the reaction is not strictly controlled by the total charge at the reactive centers, but rather seems to be influenced by the electron density in the highest occupied molecular orbital of the reactant molecules.