Extended X-ray absorption fine structure (EXAFS), high-resolution transmission electron microscopy (HRTEM), and X-ray diffraction have been used to monitor the structural development, on atomic-to-nanometer scale, prior to and along with shear band initiation in a face-centered-cubic CrCoNi medium-entropy alloy (MEA) under impact punch shear loads. Our findings provide clear evidence of chemical ordering with accompanying compositional inhomogeneity, on the length scale of one nanometer at the beginning of shear banding initiation. This chemical short-range atomic rearrangement of the three constituent elemental species is a result of atomic diffusion during high-strain-rate straining. The increasing chemical/structural inhomogeneity is likely to exert perturbations to cause uneven energy dissipation and encourage dislocation slip plane softening, both promoting strain localization that may have helped to instigate shear banding. Dynamic recrystallization is observed in later mature shear bands.