Toughened thermoplastic compositions comprising a thermoplastic polymer toughened by the inclusion of a thermoplastic elastomer derived from a particulate rubber dynamically vulcanized in the presence of a matrix polymer. The toughened thermoplastic composition exhibits properties including toughness, improved impact resistance, and improved hardness. The compositions are utilized wherever toughened, high performance polymers are desired. A method for forming the toughened polymer compositions is also described. Processing methods, such as rotational molding, utilizing the toughened polymer compositions are described.