The overall objective of the investigation presented in this paper was to study the effect of dispersion of core-shell polymer (CSP) particles within the ply interfaces on damage evolution of glass/epoxy laminates under impact loading. These laminates were fabricated with the CSP particle dispersion controlled to 14 % of the total weight of the used prepreg. A series of impact experiments were done with instrumental drop tower device at all probable impact energies within a practical low velocity impact range. The damage phenomena occurring in the internal microstructure of the laminates were analysed with the help of scanning electron microscope and correlated to the structural response of the laminate. The predominant damage modes were dependent on the magnitude of the applied impact energy. The CSP particle incorporation does not change the sequence of the fracture events but it delays and mitigates the damage creation. The deformation of the CSP particles and the tearing of their outer shells absorb most of the impact energy thereby preventing initiation of matrix cracks at lower impact energies and delaying fibre damage at higher energies. The crushed particles along with their nano-size rubber cores impede crack propagation requiring the cracks to follow torturous paths consequently dissipating additional amount of energy. These particles also promote elastic energy absorption of the laminates minimizing their tendency to fracture easily under impact. The ultimate load bearing capability of the modified laminate showed 60 % improvement and the deflection characteristics indicated lower proneness to impact.