We document how dynamic recrystallization by subgrain rotation (SGR) develops in natural olivine-rich rocks deformed in extension to up to 50% bulk finite strain (1473 K, confining pressure of 300 MPa, and stresses between 115 and 180 MPa) using electron backscatter diffraction (EBSD) mapping. SGR occurs preferentially in highly deformed grains (well-oriented to deform by dislocation glide) subjected to local stress concentrations due to interactions with hard neighboring grains (poorly-oriented olivine crystals or pyroxenes). Subgrains (misorientation <15°) are mainly delimited by tilt walls composed of combinations of dislocations of the [100](001), [001](100), [100](010) and [001](010) systems, in order of decreasing frequency. The activation and prevalence of these systems agree with a Schmid factor analysis using data for high-T dislocation creep in olivine. The development of closed 3D subgrain cells by SGR recrystallization requires the contribution of at least three different slip systems, implying the activation of hard slip systems and high (local) stresses. The transition from subgrain to grain boundaries (misorientation ≥15°) is characterized by a sharp change in the misorientation axes that accommodate the difference in orientation between the two subgrains or grains. We propose that this change marks the creation and incorporation of new defects (grain boundary dislocations with different Burger vectors and, likely, disclinations or disconnections) at the newly-formed grain boundaries and that this might be favoured by stress concentrations due to increasing misalignment between slip systems across the boundary. Finally, we document the development of strong misorientations within the parent grains, due to the accumulation of low angle grain boundaries, and between them and the recrystallized grains. SGR recrystallization may thus produce strong dispersion of the crystal preferred orientation without the need for grain boundary sliding.