Fracture toughness and failure mechanisms in preformed poly(2,6-dimethyl-1,4-phenylene oxide) (PPO) particle-modified bismaleimide (BMI) systems are investigated. The fracture toughness of BMI can be significantly improved by incorporating preformed PPO particles without causing significant deterioration in other mechanical and thermal properties. The fracture mechanisms in BMI/PPO appear to be dominated by craze-like damage. Further investigation of the craze-like damage zone using transmission electron microscopy reveals that crazes are formed inside the PPO particle phase and dilatation bands, which appear to be triggered by the crazes inside the PPO particle, are formed in the BMI matrix. Particle bridging is also found to contribute to the toughening of BMI/PPO. The benefits of using preformed PPO particles to toughen BMI and other brittle thermosets for composite and adhesive applications are discussed.