Particle cavitation in the stress-whitened zone ahead of a semicircular notch in polycarbonate blended with a core-shell rubber was characterized by transmission electron microscopy. Cavitation of rubber particles at five locations in the stress-whitened zone was correlated with the local stress and strain history. It was found that cavitation initiated some distance ahead of the notch when a mean stress condition was met. Initially, only a fraction of the particles cavitated and these were randomly distributed. Single cavitated particles grew into cavitated domains by cooperative cavitation of nearby particles until cavitation was arrested when shear yielding of the matrix provided an alternative mechanism for relief of strain energy. Far from the notch, where the stress state approached uniaxial tension, cavitated domains grew into linear arrays of cavitated particles. A mechanism of cooperative crazing in microlayer composites of polycarbonate and styrene/acrylonitrile copolymer was adapted to cooperative cavitation of core-shell rubber particles. It was proposed that cooperative cavitation of nearby particles occurred by impingement of a small plastic zone that formed at the equator of a cavitated particle.