We study the mechanical response and correlated microstructure of axial deformed fine-grained olivine aggregates as a function of incremental finite strains. Deformation experiments were conducted in uniaxial compression in an internally heated gas-medium deformation apparatus at temperatures of 1000 and 1200 °C, at strain rates of 10−6 s−1 to 10−5 s−1 and at confining pressure of 300 MPa. Sample volumes are around 1.2 cm3. Finite strains range from 0.1 to 8.6% and corresponding maximal (final) differential stresses range from 80 to 1073 MPa for deformation at 1000 °C and from 71 to 322 MPa for deformation at 1200 °C. At 1200 °C, samples approach steady state deformation after about 8% of strain. At 1000 °C, significant strain hardening leads to stresses exceeding the confining pressure by a factor of 3.5 with brittle deformation after 3% of strain. Deformed samples were characterized by electron backscatter diffraction (EBSD) and transmission electron microscopy (TEM). EBSD maps with step sizes as low as 50 nm were acquired without introducing analytical artifacts for the first time. The grain size of deformed samples ranges from 2.1 to 2.6 µm. Despite clear strain hardening, texture or microstructure do not change as a function of stress or finite strain. This observation is supported by a constant texture strength (J-index) and symmetry (BA-index), constant grain shape and aspect ratio, constant density of geometrically necessary dislocations, grain orientation spread, and constant subgrain boundary spacing and misorientation in between samples. TEM shows that all samples exhibit unambiguous dislocation activity but with a highly heterogeneous dislocation distribution. Olivine grains display evidence of [1 0 0] and [0 0 1] slip activity, but there is no evidence of interaction between the dislocations from the different slip systems. Several observations of grain boundaries acting as dislocation sources have been found. We find no confirmation of increasing dislocation densities as the cause for strain hardening during transient creep. This suggests other, yet not fully understood mechanisms affecting the strength of deformed olivine. These mechanisms could possibly involve grain boundaries. Such mechanisms are relevant for the deformation of uppermost mantle rocks, where the Si diffusion rate is too slow and dislocation glide must be accommodated in another way to fulfill the von Mises criterion.