Natural high-performance materials inspire the pursuit of ordered hard/soft nanocomposite structures at high fractions of reinforcements and with balanced molecular interactions. Herein, we develop a facile, waterborne self-assembly pathway to mimic the multiscale cuticle structure of the crustacean armor by combining hard reinforcing cellulose nanocrystals (CNCs) with soft poly(vinyl alcohol) (PVA). We show iridescent CNC nanocomposites with cholesteric liquid-crystal structure, in which different helical pitches and photonic band gaps can be realized by varying the CNC/PVA ratio. We further show that multilayered crustacean-mimetic materials with tailored periodicity and layered cuticular structure can be obtained by sequential preparation pathways. The transition from a cholesteric to a disordered structure occurs for a critical polymer concentration. Correspondingly, we find a transition from stiff and strong mechanical behavior to materials with increasing ductility. Crack propagation studies using scanning electron microscopy visualize the different crack growth and toughening mechanisms inside cholesteric nanocomposites as a function of the interstitial polymer content for the first time. Different extents of crack deflection, layered delamination, ligament bridging, and constrained microcracking can be observed. Drawing of highly plasticized films sheds light on the mechanistic details of the transition from a cholesteric/chiral nematic to a nematic structure. The study demonstrates how self-assembly of biobased CNCs in combination with suitable polymers can be used to replicate a hierarchical biological structure and how future design of these ordered multifunctional nanocomposites can be optimized by understanding mechanistic details of deformation and fracture.