Seashells are natural nanocomposites with superior mechanical strength and toughness. What is the secret recipe that Mother Nature uses to fabricate seashells? What roles do the nanoscale structures play in the inelasticity and toughening of seashells? Can we learn from this to produce seashell-like nanocomposites? The focus of this article is nacre (mother-of-pearl). The recent discovery of nanoparticles in nacre is summarized, and the role these nanoparticles play in nacre’s toughness is elucidated. It was found that rotation and deformation of aragonite nanoparticles are the two prominent mechanisms contributing to energy dissipation in nacre. The biopolymer spacing between nanoparticles facilitates the particle rotation process. This article also presents future challenges in the study of nacre’s nanoscale structure and mechanical properties.