The failure progression of a fiber-reinforced toughened-matrix composite (IM7/8552) was experimentally characterized at quasi-static (10−4 s−1) strain rate using crossply and quasi-isotropic laminate specimens. A progressive failure framework was proposed to benchmark the initiation and progression of damage within composite laminates based on the matrix-dominated failure modes. The Northwestern Failure Theory (NU Theory) was used to provide a set of physics-based failure criteria for predicting the matrix-dominated failure of embedded plies using the lamina-based transverse tension, transverse compression, and shear failure strengths. The NU Theory was used to predict the first-ply-failure (FPF) of embedded plies in [0/904]s and [02/452/−452/902]s laminates for the embedded 90° and 45° plies. The Northwestern Criteria were found to provide superior prediction of the matrix-dominated embedded ply failure for all evaluated cases compared to the classical approaches. The results indicate the potential to use the Northwestern Criteria to provide the predictive baseline for damage propagation in composite laminates based on experimentally identified damage response on a length scale-relevant basis.