In this article, the study of impact damage of laminated composites reinforced by through-thickness stitching is investigated and presented in threefold. Specimens stitched with varying stitch density and stitch thread thickness are subjected to low-velocity impact via a drop-weight machine. Impact damage resistance is first studied by examining the extent of delamination area in damaged specimens using ultrasonic C-scan analysis. It is revealed that higher stitch density is more capable of impeding delamination growth by arresting cracks at closer interval and suppressing crack propagation. The use of thicker stitch thread offers slight improvement to damage resistance by marginal reduction in delamination propagation, and is more pertinent at high impact energy levels. Impact damage response is then analyzed from the impact history response curves of impacted laminates. The impact response of load–time graphs demonstrates that the onset of delamination is not influenced by stitch density and stitch thread thickness, but the maximum residual impact force is related to the delamination size of the laminates, which is sequentially related to stitch parameters. Finally, impact damage mechanisms are elucidated by employing X-ray radiography and micro-Computed Tomography to reveal subsurface damages, primarily dominated by intralaminar matrix cracks, interlaminar delamination, and stitch fiber/matrix debonding. It is revealed that stitches act as crack initiation sites, due to the presence of weak resin-rich pockets around stitch threads, thus inadvertently resulting in densely stitched composites having more stitch-induced matrix cracks upon impact loading. Contrarily, specimens with higher stitch density and thread thickness are more capable of impeding delamination growth by effectively bridging delamination cracks and arresting crack propagation. Principal mechanisms responsible for impact resistance performance of stitching namely crack arresting and crack bridging are presented and discussed.