The crazing behavior of polymer nanocomposites formed by blending polymer grafted nanoparticles with an entangled polymer melt is studied by molecular dynamics simulations. We focus on the three key differences in the crazing behavior of a composite relative to the pure homopolymer matrix, namely, a lower yield stress, a smaller extension ratio, and a grafted chain length dependent failure stress. The yield behavior is found to be mostly controlled by the local nanoparticle-grafted polymer interfacial energy, with the grafted polymer-polymer matrix interfacial structure being of little to no relevance. Increasing the attraction between nanoparticle core and the grafted polymer inhibits void nucleation and leads to a higher yield stress. In the craze growth regime, the presence of "grafted chain" sections of ≈100 monomers alters the mechanical response of composite samples, giving rise to smaller extension ratios and higher drawing stresses than for the homopolymer matrix. The dominant failure mechanism of composite samples depends strongly on the length of the grafted chains, with disentanglement being the dominant mechanism for short chains, while bond breaking is the failure mode for chain lengths >10Ne, where Ne is the entanglement length.