To develop durable composite materials, it is crucial to elucidate the correlation between nanoscale damage in thermosetting resins and the degradation of their mechanical properties. This study aims to investigate this correlation by performing cyclic loading tests on the cross-linked structure of diglycidyl ether bisphenol A (DGEBA) and 4,4′-diaminodiphenyl sulfone (44-DDS) using all-atom molecular dynamics (MD) simulations. To accurately represent the nanoscale damage in MD simulations, a bond dissociation algorithm based on interatomic distance criteria is applied, and three characteristics are used to quantify the microscopic damage: stress–strain curves, entropy generation, and the formation of voids. As a result, the number of covalent bond dissociations increases with both the cyclic loading and its amplitude, resulting in higher entropy generation and void formation, causing the material to exhibit inelastic behavior. Furthermore, our findings indicate the occurrence of a microscopic degradation process in the cross-linked polymer: Initially, covalent bonds align with the direction of the applied load. Subsequently, tensioned covalent bonds sequentially break, resulting in significant void formation. Consequently, the stress–strain curves exhibit nonlinear and inelastic behavior. Although our MD simulations employ straightforward criteria for covalent bond dissociation, they unveil a distinct correlation between the number of bond dissociations and microscale damage. Enhancing the algorithm holds promise for yielding more precise predictions of material degradation processes.