Continuous fiber, high-performance composites have found increased use in the design of a large number of civilian and military aircraft. However, the brittle nature of the carbon fiber and the resins used as matrices have restricted the full utilization of these materials in aerospace application. Hence, the development of toughened composites has a great potential for expanding the use of current materials, and a major effort is being undertaken in order to develop toughened composites. Due to several advantages of introducing a ductile or flexible material between the fiber and matrix, coating the fiber with polymers has recently received considerable interest and much effort has been done to understand the effect of the interlayer on composite properties. This paper reviews the technology of toughening composites by fiber coating, showing the composite systems, coating materials, fiber coating methods and toughness mechanisms which have been studied. Finally, a separate section is dedicated to reviewing dynamic mechanical analysis of fiber-coated composites due to the increasing importance of this technique for characterization of these materials.