The work done in this thesis aims to improve understanding of advanced multifunctional nanocomposite materials by developing physics-based multi-scale model of nanoparticle reinforced polymer matrix composites in order to accelerate their implementation into aircraft structural applications. These objectives of material development are addressed through the use of computational material modeling. In this regard, a novel technique to model damage and damage evolution in polymer nanocomposites (PNC's) using the Internal State Variable (ISV) approach is proposed. The multi-scale aspects of the nanocomposite are captured by embedding local inhomogeneities and the localized nanoparticle (nanographene) and polymer atom interactions at the interface into a continuum scale model. This approach assumes that the damage evolution is primarily due to changes in non-bonded interactions at the nanoscale (nanoscale-informed damage mechanics model or NIDM model). The NIDM model attempts to (a) capture the stiffness and strength enhancements due to nanoscale reinforcement of graphene by tracking the change in Helmholtz free energy of nanocomposite over baseline polymer and (b) models the stiffness degradation using an internal state variable (ISV) approach based on the fundamental thermodynamic principles of damage mechanics. The unknown coefficients in the NIDM model are obtained by a least squares fit of the PNC stress-strain behavior using molecular dynamics (MD) simulations. It is envisioned that the damage model can be easily incorporated into a FEA algorithm and used by NASA and the aerospace industry for structural design applications.