Thin polystyrene (PS) films embedded with multiwalled carbon nanotubes (MWNTs) grafted with PS chains were prepared via solution casting, and the nanomechanical behavior of the thin films was probed by using AFM, TEM, and SEM. Percolated network of entangled nanotubes was observed to be well-dispersed in the PS thin films, and the films demonstrated strikingly different mechanical properties as compared to the pristine PS film. The MWNT/PS films were very tough showing no microfracture at large strains beyond 20 %. Although crazes of similar microstructure to those in pristine PS were developed upon stretching, they were short and narrow with a width no more than approximately 2 μ m. AFM analyses revealed that crazes grew by following a micronecking mechanism, similar to that commonly observed in neat polymers, but craze widening was substantially restricted. As a result, nucleation of new crazes became the dominant process over widening of the existing crazes as the applied strain increased. No nanotubes were observed inside crazes; they appeared to be excluded from craze fibrillation and were observed to accumulate at the craze boundaries. The growth of crazes in the MWNT/ PS films was constrained by the nanotubes too rigid to be drawn into the crazes during the deformation.