Despite extensive efforts to understand the toughening mechanism of rubber-modified semicrystalline polymers, the plastic deformation event at the crack tips with an extreme deformation gradient and its correlation with phase morphology is, thus far, poorly understood. In this study, micro Fourier transform infrared measurements were adopted to give direct evidence of plastic deformation at the crack tips by the molecular orientation in nylon 6/ethylene-propylene-diene terpolymer (EPDM) blends with a distinct phase morphology. Significant plastic deformation ahead of the crack tips, manifested by a high molecular orientation, was observed in the compatibilized nylon 6/EPDM blends with fine rubber particles. Moreover, the increased transverse crack-propagation resistance due to high molecular orientation dramatically extended the plastic deformation into adjacent regions around the crack tips; this was responsible for enhanced energy dissipation during the fracture process. (C) 2010 Wiley Periodicals, Inc. J Appl Polym Sci 117: 3139-3145, 2010