With their excellent mechanical properties, Cu/Ta metallic nanolayered composites (MNCs) are extensively applied in aerospace and nuclear industry facilities. However, shear localization severely disrupts the ability of these materials to deform uniformly, attracting many researchers. The necessary time and length conditions of experiments limit the investigation of shear localization; thus, relevant studies are insufficient. The molecular dynamics simulation perfectly corresponds to the short duration and high strain rate of the deformation process. Therefore, in this study, we used molecular dynamics simulations to explore the effect of layer thickness on the shear localization of Cu/Ta MNCs with Kurdjumov–Sachs (KS) orientation–related interfaces. Our research demonstrates that shear localization occurs in samples with layer thicknesses below 2.5 nm, resulting in an inverse size effect on the flow strength. The quantitative analysis indicates that the asymmetry of dislocations in the slip transmission across the interface causes interface rotation. This activates dislocations parallel to the interface to glide beyond the distance of individual layer thicknesses, eventually forming shear bands. Both interface rotation and sliding dominate the plastic deformation in the shear band region. In addition, the dislocation density and amorphous phase increase with decreasing layer thickness.