In this study, the objective was to develop, manufacture, and test hybrid nano/microcomposites with a nanoparticle reinforced matrix and demonstrate improvements to damage tolerance via Mode-II fracture toughness and impact damage absorption. The material employed was a woven carbon fiber/epoxy composite, with multi-wall carbon nanotubes as a nano-scale reinforcement to the matrix. A direct-mixing process, aided by a block copolymer dispersant and sonication, was employed to produce the nanoparticle-filled epoxy matrix. Fracture toughness was tested by several different Mode- II and mixed Mode-I/Mode-II specimens to determine the toughness improvement. Testing and material difficulties were overcome by this approach, showing a Mode-II toughness improvement of approx. 35% in the hybrid material. Impact tests were performed in a falling-weight drop tower at different energies to introduce interlaminar damage in samples of both materials. Impact damaged specimens were imaged by ultrasonic c-scans to assess the area of the damage zone at each ply interface. Post-mortem optical microscopy confirmed the interlaminar nature of the impact damage. These tests showed a consistently smaller absorbed energy and smaller total damage area for hybrid composite over reference material, translating to a nominally higher ‘effective impact toughness’ in the hybrid composite (approx 42%) regardless of specific impact energy.