This paper demonstrates the viability of in-situ transmission electron microscopy for studying the deformation mechanisms of polymer nano-composites. In-situ straining studies are performed on carbon multiwalled nanotube (MWNT)-polystyrene composite films. The experiments show that load transfer across the nanotube-polystyrene interface is operative well into the plastic deformation regime of the composite film. The MWNTs are observed to bridge cracks propagating through the polystyrene, providing closure stresses across the crack wake. Although some MWNTs fracture by either a sword-in-sheath mechanism or transverse shear fracture, most of the MWNTs eventually debond at the MWNT-polymer interface and subsequently pull out of the matrix.