It is shown that simultaneous improvement of vibration damping capacity and interlaminar fracture toughness in composite laminates can be achieved by using polymeric interleaves between the composite laminae. The specific case of Mode II interlaminar fracture toughness and flexural damping capacity of interleaved composite laminates is studied. Graphite/epoxy, E-glass/epoxy and E-glass/polyetherimide composite laminates with polymeric interleaves of several different thicknesses and materials were tested using both the end notch flexure (ENF) test for Mode II fracture toughness and the impulse-frequency response test for flexural damping capacity. The Mode II energy release rate GIIc for all three composites increased linearly with increasing interleaf thickness up to a critical thickness, then dropped off with further increases in thickness. The damping loss factor η for all three composites increased linearly with increasing interleaf thickness up to the maximum thickness. Analytical models for predicting the influence of interleaves on GIIc and η are developed, along with a hypothesis for the critical thickness effect with regard to fracture toughness.