For a more complete understanding of the toughening mechanism of polypropylene (PP)/ethylene-propylene-diene rubber (EPDM) blends, dynamic packing injection molding was used to control the phase morphology and rubber particle orientation in the matrix. The relative impact strength of the blends increased at low EPDM contents, and then a definite ductile-brittle (D-B) transition was observed when the EPDM content reached 25 wt %, at which point blends should fail in the ductile mode with conventional molding. Wide-angle X-ray diffraction (WARD), differential scanning calorimetry (DSC), and scanning electron microscopy (SEM) were used to investigate the shear-induced crystal structure, morphology, orientation, and phase separation of the blends. WARD results showed that the observed D-B transition took place mainly for a constant crystal structure (a form). Also, no remarkable changes in the crystallinity and melting point of PP were observed by DSC. The highly oriented and elongated rubber particles were seen via SEM at high EPDM contents. Our results suggest that Wu's criterion is no longer valid when dispersed rubber particles are elongated and oriented. The possible fracture mechanism is discussed on the basis of the stress concentration in a filler-dispersed matrix. It can be concluded that not only the interparticle distance but also the stress fields around individual particles play an important role in polymer toughening.