Small-angle X-ray scattering (SAXS), atomic force microscopy (AFM), and other techniques were combined in a study of segmented thermoplastic elastomers (Pebax) containing poly(tetramethylene oxide) soft segments and hard blocks of nylon-12. AFM was used to provide real-space resolution of the morphology during tensile elongation and after subsequent relaxation. Nanofibril formation, starting at strains of about 1.5X, was characterized in detail, showing the evolution of the number, orientation, and size of these highly stressed load-bearing fibrils that dominated the mechanical properties. AFM results were combined with two-dimensional SAXS, data to develop a model considering the breakup of the original ribbonlike nylon-12 lamellae in combination with progressive reformation and orientation of highly stressed fibrils. The complex changes in the two-dimensional SAXS, images included a distorted arc pattern due to increased spacing of the lamellae in the stretch direction at low strains, with an evolution to completely different patterns dominated mainly by intrafibrillar and interfibrillar scattering contributions. Between stretch ratios of 1.5 and 2.3X original lamellae were progressively broken up, and by 3.2X, all lamellae independent of the initial orientation were broken into smaller crystals with low aspect ratios. The results were combined with differential scanning calorimetry and birefringence data taken on films under strain to obtain insight into the microscopic basis for strain softening and plastic deformation in Pebax and related segmented polymers. Birefringence cycling with strain provided a consistent picture with the other techniques for understanding the redistribution of stress on a nanoscopic scale during deformation and relaxation.