Potting compounds are composite materials made up of a mixture of a polymer matrix and hollow particles called microballoons. They are used for reinforcing the core section of honeycomb laminates around fastener locations in aerospace applications. Commercially, different compounds of various densities as well as compressive and shear strengths are available; nevertheless, their selection as reinforcement material depends on the type of load to be supported. Normally, the higher the strength, the heavier the compound used in the reinforcement of the core. Another important characteristic to take into account is moisture absorption. Potting compounds are known for absorbing moisture, which represents a disadvantage in sandwich laminates since the integrity of the structure could be compromised due to decrease in mechanical properties of the potting compound. In this research, a potting compound was developed in such a way that high strength could be obtained under dry and hygrothermal conditions without having a substantial increase in density. The compound was made by incorporating different types of microballoons and either single-walled or multi-walled carbon nanotubes as reinforcing particles. In order to obtain high strength and low density compounds, two studies were conducted to understand the effect of glass microballoons and carbon nanotubes on the mechanical properties of the potting compound. In the first study, four different types of glass microballoons were used to manufacture one-part compounds with physical and mechanical properties similar to those of a two-part compound (EC-3500). Results suggested that several compounds could be attained with properties similar to those of EC-3500 with minimum increase in density. In the second study, carbon nanotubes were incorporated into both a low and a high density potting compound with the purpose of studying the effect of the nanotubes on their mechanical properties. Three vi different mixing methods (ultrasound, calendering, and centrifugal) were employed to disperse the functionalized single-walled and multi-walled carbon nanotubes in the resin of the potting compound. Through various processing parameters, several nano-enhanced potting compound samples were made and tested for mechanical properties under dry and hot/wet conditions. Results showed a significant increase in compressive and lap shear strength with a minimum increase in density for the nano-enhanced specimens prepared with vacuum compared to the properties of EC-3500.