Samples of metastable Mg2Geo4 olivine fail by faulting when loaded at temperatures where the incoherent nucleation and growth of spinel (the stable phase) just becomes possible. At lower temperatures, where the transformation is inhibited, metastable olivine is ductile and strong, while at higher temperatures, where the transformation happens very quickly, samples are ductile and weak. Microfaults that have just been created and have slipped very little contain only very fine-grained spinel. Those that have slipped more contain a mixture of fine-grained spinel and larger, broken, olivine fragments. A new type of transformation microstructure that develops only under nonhydrostatic stress occurs in all specimens that failed; the spinel nucleates on grain boundaries and on subgrain boundaries within olivine and grows as fine-grained, lens-shaped bodies with a strong preferred orientation normal to maximum compression. The correlation between the onset of transformation, the new microstructure, and the mechanical instability suggests a cause and effect relationship. The grain size of the spinel within the microfaults suggests that these zones have superplastic properties; in this case the instability should not be suppressed by increasing pressure as normal frictional processes are suppressed. Analogous conditions exist in down going slabs of lithosphere in the mantle, and we postulate that the same mechanism that causes faulting in our samples operates in the mantle causing deep-focus earthquakes. ¿ American Geophysical Union 1991