This work uses in situ transmission electron microscopy (TEM) based micromechanical testing to isolate and quantify the microstructural toughening mechanisms active in nanostructured Al2O3/GdAlO3 eutectic samples. The effect of fracture direction across orthogonal sections of the rod-like eutectic was used to reveal the influence of different fracture paths and mechanisms on toughening. The average fracture toughnesses of the rod-like structures in the longitudinal cross-section and transverse cross-section are 2.4 MPa·m1/2 and 2.7 MPa·m1/2, respectively. Multiple samples tested in the longitudinal cross-section show significant R-curve toughening response, and obtain values greatly exceeding the initial values upon crack extension. It is concluded that nanoscale crack bridging induces deflection of the crack path, which leads extrinsic energy dissipation as the crack opens. Micropillar compressions are also performed to investigate the composite’s strength. Sample orientation strongly affects the deformation mode and interfacial sliding occurs when the maximal shear stress is parallel to the interface.