Methoxy silyl-terminated polypropylene oxide (MS-PPO) has been widely used as an adhesive between different materials and has resulted in substantially improved elongation properties by alloying with epoxy resins (EPX). The fracture stress of MS-PPO/EPX polymer alloys can also be significantly increased by the further addition of silane coupling agents. However, the microscopic mechanisms underlying the toughening of such polymer alloys have not been clarified due to the lack of characterization of the microscopic mechanical properties. In this study, we characterized the nanoscale mechanical properties of MS-PPO/EPX polymer alloys using atomic force microscopy (AFM) nanomechanics. We found that silane coupling agents increased the compatibility of MS-PPO and EPX, leading to the nanoscale dispersion of EPX in MS-PPO, forming a MS-PPO-rich phase matrix. By tracing the microscopic stress distribution and deformation behavior of these materials using AFM nanomechanics, it was found that polymer alloys with different compositions exhibited different microscopic toughening mechanisms. Microscopic stretch-induced phase separation (SIPS) occurred in the MS-PPO-rich phase matrix, resulting in improved macroscopic tensile properties. The SIPS phenomenon is crucial for alloy toughening, providing new insights into the toughening mechanism of polymer alloys.