Polymer nanocomposite films have recently shown superior energy dissipation capability by using the micro-projectile impact testing method. However, how stress waves interact with nanointerfaces and the underlying deformation mechanisms have remained largely elusive. This paper investigates the detailed stress wave propagation process and dynamic failure mechanisms of layered poly(methyl methacrylate) (PMMA)-graphene nanocomposite films during piston impact through coarse-grained molecular dynamics simulations. The spatiotemporal contours of stress and local density clearly demonstrate shock front, reflected wave, and release wave. By plotting shock front velocity (Us) against piston velocity (Up), we find that the linear Hugoniot Us−Up relationship generally observed for bulk polymer systems also applies to the layered nanocomposite system. When the piston reaches a critical velocity, PMMA crazing can emerge at the location where the major reflected wave and release wave meet. We show that the activation of PMMA crazing significantly enhances the energy dissipation ratio of the nanocomposite films, defined as the ratio between the dissipated energy through irreversible deformation and the input energy. The ratio maximizes at the critical Up when the PMMA crazing emerges and then decreases as Up further increases. We also find that a critical PMMA-graphene interfacial strength is required to activate PMMA crazing instead of interfacial separation. Additionally, layer thickness affects the amounts of input energy and dissipated energy for nanocomposite films under impact. This study provides important insights into the detailed dynamic deformation mechanisms and how nanointerfaces/nanostructures affect the energy dissipation capability of layered nanocomposite films.