Real-time deformation events in epoxies with different cross-link density, modified with rubbery and glassy core block copolymer micelles, were captured by collecting small-angle X-ray scattering patterns while simultaneously straining the sample. Analysis and interpretation of the scattering patterns provide quantitative information about deformation processes leading to toughness in these materials. These experiments yielded direct evidence of cavitation in 30 nm rubber particles as anticipated by theory. We found that the extent of void growth after cavitation is strongly affected by the cross-link density of the matrix and is directly correlated to the toughness enhancement of the material. Our findings imply that the combination of micelle and matrix properties strongly affects the processes leading to toughness in block copolymer modified epoxies.