The fracture toughness of a series of nylon 6/organoclay/maleic anhydride grafted polyethylene-octene elastomer (POE-g-MA) ternary nanocomposites with different compositions of clay and POE-g-MA was evaluated using the J-integral method. The fracture toughness of the ternary nanocomposites increased with POE-g-MA content at a fixed loading of organoclay. In contrast, increasing the loading of organoclay in nylon 6/POE-g-MA (70/30) blends reduced the toughness of the ternary nanocomposites. Transmission electron microscopy (TEM) with single-edge-double-notch four-point-bend (SEDN-4PB) specimens revealed the internal cavitation of POE-g-MA particles leading to effective relief of crack-tip tri-axial stress along with craze-like damage features consisting of line arrays of expanded voids in both un-reinforced and organoclay reinforced nylon 6/POE-g-MA blends, followed by very severe matrix plastic deformation at the crack-tip region. It is this plastic work that mainly contributes to the drastic enhancement of fracture toughness of the ternary nanocomposites, besides the energies absorbed in cavitation and stretching of rubber particles as well as delamination of clay layers.