Abstract: We utilize the shape derivative of the classical Griffith's energy in a level set method for the simulation of dynamic ductile fracture. The level set is defined in the undeformed configuration of the object, and its evolution is designed to represent a transition from undamaged to failed material. No re-meshing is needed since the resulting topological changes are handled naturally by the level set method. We provide a new mechanism for the generation of fragments of material during the progression of the level set in the Griffith's energy minimization. Collisions between different material pieces are resolved with impulses derived from the material point method over a background Eulerian grid. This provides a stable means for colliding with embedded interfaces. Simulation of corotational elasticity is based on an implicit finite element discretization.