Sheared amphibolite rocks from Diancang Shan high-grade metamorphic complex along the Ailao Shan-Red River shear zone, southwestern Yunnan, China, show typical mylonitic microstructures. The mylonites are characterized by porphyroclastic microstructures and the ultramylonites are highly lineated with alternating amphibole- and quartzofeldspathic domains. Microstructural analysis and P/T estimation suggest that the amphibole grains in the mylonitic rocks are deformed and dynamically recrystallized at amphibolite facies. In the mylonitic amphibolites, there are two types of amphibole porphyroclasts, i.e. type I “hard” and type II “soft” porphyroclasts. They have their [001] crystallographic orientations subnormal and sub-parallel to the stretching lineation of the rocks, respectively. The two types of porphyroclasts show distinct deformation microstructures and sub-microstructures formed by various deformation mechanisms, which contribute in different ways to the generation of the fine-grained matrix. Shape preferred orientation analysis, misorientation analysis of the two types of porphyroclasts and new fine grains around them further prove the generation of the fine grains in matrix from the type II porphyroclasts. The type I “hard” porphyroclasts are deformed mainly by mechanical rotation, work hardening and intragranular microfracturing. In contrast, the deformation of the type II “soft” porphyroclasts is mainly attributed to crystalline plasticity, i.e. twinning, dislocation creep and dynamic recrystallization. During the deformation of the type II porphyroclasts, the (100) [001] slip system plays a dominant role during deformation and grain size reduction of amphibole. Twinning along the active (100) slip system, in combination with dislocation creep (gliding and climbing) governs the nucleation of subgrains and formation of dynamically recrystallized fine grains, a process here named Twinning Nucleation Recrystallization.