By means of a cascade model calculation, it is shown that medium mass fragment production in proton-induced reactions very likely proceeds via the breakup of the residual nuclear system rather than coalescence. The reaction trajectory of the excited nuclear system is found to enter the mechanical instability region with S/Aapprox.0.4, well below the average S/A of 1.6--2.0 observed experimentally for heavy fragments in proton-induced reactions. We estimate the increase in entropy generated by passage through the mechanical instability region of nuclear matter by means of two simple models. The predicted final entropy is comparable to what is found experimentally.