Over the last decade, the introduction of interleaves in composites has been widely recognized as a means to enhance the interlaminar fracture resistance and damage tolerance of composites. However, the effect of the interleaves on transverse cracking has not received substantial attention. In part I, a model interleaved system consisting of carbon/epoxy and thermoplastic interlayers is investigated experimentally and analytically. The analytical model, “The Variational Method,” which takes the effects of the interlayers into account is developed from the works of Hashin and Naim. This model is used to identify key parameters in transverse crack evolution and is demonstrated to be an effective tool for tailoring of composite materials for optimal performance. In Part II of this work, an experimental technique is developed for characterizing the G_Ic of a material, a key parameter noted in Part I. A major result of this experimental study was a very notable path dependence of G_Ic. Furthermore, through FEM studies and the “Effective-Flaw Model,” the transverse crack driving force is accurately described in composites with interlayers. A mechanism of soft intermediate interlayers arresting transverse crack growth is proposed and substantiated by the above numerical investigation.