The objective of this study was to identify the microstructural mechanisms controlling Ω precipitates’ contribution to the high strength and ductility of Al–Cu–Mg–Ag alloys subjected to high impact loading conditions. Three interrelated approaches were used: (i) HRTEM imaging of deformed Ω precipitates in ballistically impacted Al–Cu–Mg–Ag plates, (ii) microstructurally based finite element (FE) analysis based on specialized crystalline plasticity formulations, and (iii) molecular dynamics (MD) simulations of dislocation nucleation and emission. The FE and MD simulations detail the evolution of dislocation densities and dislocations at the Al/Ω interface, which are consistent with the experimentally observed multiplicity of shear cutting of thin Ω precipitates. Furthermore, the FE results indicate that unrelaxed tensile strains at the Al/Ω interface can inhibit localized deformation in the alloy.