The present study compares the effects of two different material processing techniques on modifying hydrophilic SiO2 nanoparticles. In one method, the nanoparticles undergo plasma treatment by using a custom-developed atmospheric-pressure non-equilibrium plasma reactor. With the other method, they undergo chemical treatment which grafts silane groups onto their surface and turns them into hydrophobic. The treated nanoparticles are then used to synthesize epoxy resin-based nanocomposites for electrical insulation applications. Their characteristics are investigated and compared with the pure epoxy resin and nanocomposite fabricated with unmodified nanofillers counterparts. The dispersion features of the nanoparticles in the epoxy resin matrix are examined through scanning electron microscopy (SEM) images. All samples show evidence that the agglomerations are smaller than 30 nm in their diameters. This indicates good dispersion uniformity. The Weibull plot of breakdown strength and the recorded partial discharge (PD) events of the epoxy resin/plasma-treated hydrophilic SiO2 nanocomposite (ER/PTI) suggest that the plasma-treated specimen yields higher breakdown strength and lower PD magnitude as compared to the untreated ones. In contrast, surprisingly, lower breakdown strength is found for the nanocomposite made by the chemically treated hydrophobic particles, whereas the PD magnitude and PD numbers remain at a similar level as the plasma-treated ones.