Mineralized biological materials such as nacre or bone achieve remarkable combinations of stiffness and toughness by way of staggered arrangements of stiff components (nanoscale or microscale fibers or tablets) bonded by softer materials. Under applied stress these components slide on one another, generating inelastic deformations and toughness on the macroscale. This mechanism is prominent in nacre, a remarkable material which is now serving as a model for biomimetic materials. In order to better identify which type of nacre should serve as a biomimetic model, the toughness of nacre from four different mollusk species was determined in this study. Nacre from the pearl oyster was found to be toughest, and for the first time remarkable deformation and fracture patterns were observed using in situ optical and atomic force microscopy. Under stress, stair-like deformation bands deformed at an angle to the loading direction, forming a dense, tree-like network. This marks a clear difference from the now well-documented “columnar” failure mode, in which deformation bands are perpendicular to the loading direction. Analytical and numerical models reveal the conditions for the transition between the columnar and stair failure modes, namely large or random overlap between inclusions and local shear stress generated by inhomogeneities in the material. “Stair” failure promotes spreading of non-linear deformation and energy dissipation, which translates into a greater toughness overall. A similar mechanism may also occur in bone, which has a microstructure which is in many ways similar to sheet nacre.