Formation of dilatation bands has been found in a series of moderately crosslinked thermosets with molecular weights between crosslinks, Mc, ranging from 560 to 1000 g/mole. These dilatation bands, although they do not show distinct craze fibrils inside the hand, do behave mechanically like the well-known crazing phenomenon observed in polystyrene. Although the cause for the formation of dilatation bands is still largely unknown, the occurrence of the craze-like fracture phenomenon (dilatation bands) is found to be strongly influenced by the stress state the matrix experiences, by the type of loading applied to the specimen, and by the type/size of toughener particles incorporated in the matrix. The tendency for dilatation band formation in engineering thermosets can be greatly enhanced by the use of craze-prone toughener particles, such as nylon particles. The toughening effect via these newly observed dilatation bands is found to be quite impressive, and in some cases, can approach that via the shear-handing process. The potential significance of the present finding for a better design of toughened thermosets for structural applications is discussed.