Activity of deep earthquakes, which increases with depth from ~400 km to a peak at ~600 km and abruptly decreases to zero at 680 km, is enigmatic, because brittle failure is unlikely to occur under the corresponding pressures of 13−24 GPa. It has been suggested that pressure-induced phase transformations of olivine in subducted slabs are responsible for occurrence of the deep earthquakes, based on deformation experiments under pressure. However, most experiments were made using analogue materials of mantle olivine and at pressures below ~5 GPa, which are not applicable directly to the actual slabs. Here we report the results of deformation experiments combined with in situ X-ray observations and acoustic emission measurements on (Mg,Fe)2SiO4 olivine at 11−17 GPa and 960−1250 K. We find that shear cracking followed by rapid formation of nano-crystalline wadsleyite on the crack surface is essential for the occurrence of faulting, which is observed only at temperatures around 1160 K. The faulting is accompanied by intense acoustic emissions and partial melting, which is likely to be induced by rapid sliding and adiabatic shear heating along the weak layer of nano-crystalline wadsleyite. In contrast, the olivine to ringwoodite transformation in (Mg,Fe)2SiO4 olivine would not cause such faulting because of the slow diffusion creep of ultrafine-grained ringwoodite. Our findings suggest the transformational faulting occurs on the surface of the metastable olivine wedge in subducted slabs, leading to deep earthquakes in the limited depth range.