A dispersion of stiff and thin (‘rigid line’) inclusions (RLIs) in a matrix material may result beneficial for stiffening in the elastic range, but might be detrimental to strength, as material instabilities may be triggered by inclusions when the matrix is brought to a viscoplastic-damaging state. This dual role of RLIs is investigated by means of the embedded reinforcement model. Validated against available analytical predictions, this numerical model is employed to assess the roles of RLIs’ orientation, interaction, volume fraction, and distribution, considering up to 1500 inclusions. When the matrix material deforms inelastically, RLIs produce stress concentrations that promote the nucleation of shear bands. These are characterized at collapse for many distributions of RLIs, showing that their effects range from almost negligible to a disrupting alteration of the dominant failure mechanism. In the latter case, it is shown that the dominant shear bands can be fragmented by RLIs into a mosaic of tiny localization bands. These results offer new insights into energy dissipation mechanisms of reinforced materials, as they are promoted or inhibited by the interactions of rigid line inclusions.