A constitutive model is developed to describe the creep behavior of olivine-spinel aggregates, and conditions for transformation shear instability and deep earthquake nucleation are predicted. Using the Eshelby-Mori-Tanaka theory <Eshelby, 1957; Mori and Tanaka, 1973>, a piecewise incremental method is employed to calculate the stress-strain relation for the olivine-spinel aggregate. The creep strain and strain rate depend on differential stress, the aspect ratio of spinel inclusions, latent heat of the phase transformation, the relaxation of the volumetric phase transformation strain &egr;kkph, and the creep law parameters of spinel. A constant strain rate calculation suggests that above a critical percentage transformation &xgr;c an earthquake may nucleate owing to the system's potential for a shear stress drop, provided &egr;kkph of ~8% is not relaxed and spinel grain size dsp remains small. A normalized critical stiffness, calculated from the potential shear stress drop Δ&tgr; and the critical shear strain &ggr;c needed to change from one steady state creep condition to another, suggests that a plate-like, partially transformed region is required for deep earthquake nucleation. Such a region may be formed by localized deformation or preexisting heterogeneities in a subducting rock.¿ 1997 American Geophysical Union