The relationship of blend morphology to deformation mechanisms and notched Izod impact strength was studied with three butadiene-based impact modifiers for polycarbonate (PC). The impact modifiers were a linear polybutadiene (PB), a styrene-butadiene-styrene block copolymer (SBS), and a structured latex particle having a PB core and methyl methacrylate/styrene shell (MBS). The particle-size distribution in the blends was determined from transmission electron micrographs (TEM). Fractographic analysis combined with TEM examination of thin sections from impacted specimens provided insight into the failure mechanisms. Good impact was achieved with PC/MBS blends when cavitation of the core-shell particles relieved triaxiality and enabled the matrix to fracture by the plane stress ductile tearing mode that is characteristic of thin PC. The best impact properties were obtained with PC/SBS blends when the modifier was dispersed as aggregates of small particles. Cavitation at the weak internal boundaries relieved triaxiality, but subsequent coalescence of cavitated particles during ductile drawing of the matrix created critical size voids and the resulting secondary cracks reduced the toughness of the blend. In general, PB did not significantly enhance the impact strength of PC.