The toughening effect of cellulose nanowhiskers (CNWs) on modified polyvinyl acetate (PVAc) was analyzed with the help of morphology, relaxation, and creep behavior. The CNWs together with bound moisture at the matrix/whisker interfaces resulted in significant improvement in resistance to crack initiation and propagation. The magnitude of plastic deformation of the nanocomposites was higher than that of the neat PVAc. The relaxation temperature decreased, while the width of the damping peak increased with increasing CNW and moisture contents. The results from creep modeling showed that the instantaneous elastic modulus first increased and then decreased with the addition of CNWs, while the time-dependent elasticity and viscosity decreased. The results suggested that the reinforcing effect of the CNWs was overwhelmed by the plasticizing effect of the bound moisture. Furthermore, low concentrations of CNWs significantly improved the fracture toughness of PVAc at the minor cost of strength, stiffness, and creep resistance. In this article, we present a novel approach to studying the toughening effect of CNWs on polymers using fracture tests and viscoelastic modeling