The resistance of methyl methacrylate-butadiene-styrene graft copolymer (MBS) particles against cavitation increases with decreasing particle size, and there exists a critical particle size below which the MBS particles are unable to cavitate. The inability of small particles to cavitate is the reason for the decrease of the impact properties of poly(vinyl chloride) (PVC)/MBS blends with very small MBS particles (d0 < 150 nm). A toughening mechanism is proposed for the PVC/MBS blends in which the particle size of the rubber particles and the interparticle distance play equally crucial roles.