This study employs the peridynamic (PD) theory to investigate the fracture behavior of nanostructured materials. A nonlocal theory, peridynamics, constitutes a new approach for predicting the fracture behavior of material systems with dissimilar constituent materials. Interfaces between dissimilar materials have their own properties and damage can propagate when and where it is energetically favorable for it to do so. This feature allows modeling of damage initiation and propagation at multiple sites, with arbitrary paths inside the material, without resorting to special crack growth criteria. Nanostructured materials have significantly larger fraction of interfaces; hence, PD theory provides the ability for realistic computational modeling of fracture and failure in these materials. This approach is utilized to investigate the effect of the interface properties between the matrix and the nanoinclusions with varying sizes and volume ratios under impact loading.