Introducing beads on the fibers is a promising design, which can give rise to enhanced strength and toughness of polymer matrix composites. In this study, we propose a computational model for fracture of the composites with beaded fibers, in which fiber breakage, plastic deformation of polymer matrix, friction between the bead and matrix, geometric interlocking between the bead and matrix, and debonding of the fiber–matrix, bead–matrix and fiber–bead interfaces are accounted for; calculations are carried out for pullout of beadless and beaded fibers embedded in a polymer matrix. It is found that the strength and toughness of the beaded-fiber reinforced composites are controlled by the synergistic interactions of operative mechanisms involved in fiber pullout. Compared with beadless fibers, beaded fibers enable the development of lower levels of stresses at the fiber–matrix and bead–matrix interfaces, retarding interfacial debonding. The presence of beads activates large plastic deformation of the polymer matrix and promotes geometric interlocking and frictional dissipation, giving rise to the simultaneous improvement of strength and toughness of the composites. It is identified that the polymer matrix with enhanced strain hardening spreads plastic deformation in the matrix and promotes stress transfer from the matrix to the fiber, thereby amplifying strength and toughness simultaneously. The fibers–matrix interface with intermediate strength levels leads to weak pullout resistance. In addition, we show that the low coefficient of friction plays a crucial role in promoting stress transfer from the matrix to fiber, thereby increasing the pullout resistance of beaded fibers.