In this work, the composite hydrogel toughening behaviors as manifested by strain rate-dependent viscoelastic properties and enhanced fracture mechanics, that is, suppressed catastrophic crack propagation with increased resistance, are systematically examined by using cellulose nanofibrils (CNFs) as fillers in the polyacrylamide (PAAm) matrix. The uniaxial deformation tests show that the tearing energy increases with crack velocity and becomes dominated by the viscoelastic energy dissipation in front of the crack tip. The creep dynamics of the composite hydrogels under a constant stress is examined, and the results indicate that the incorporation of the CNF pronouncedly suppresses the creep deformation. In addition, the microdeformation and failure mechanisms are analyzed through the observation of morphology of arrested crack tips and the damage zone by transmission electron microscopy and scanning electron microscopy. By aligning the CNF along the crack direction, it is possible to focus on the study of interfacial slip mechanics and identify the role of interfacial slip during the energy dissipation process. The results indicate that the CNFs are largely orientated parallel to the loading direction to maximize the energy dissipation, where the initiation of crack propagation is the primary fracture mechanism in composite hydrogels. The coarse feature on the composite fracture surface implies that the CNF initiates deflection of crack propagation fronts and thus increases the strain energy for continuation of the fracture. It is envisioned that with the incorporation of interdisciplinary strategies, one can rationally combine multiple approaches toward the creation of nanocomposite hydrogels with enhanced mechanical properties.