Microstructures provide the crucial link between solid state flow of rock materials in the laboratory and large-scale tectonic processes in nature. In this context, microstructural evolution of olivine aggregates is of particular importance, since this material controls the flow of the Earth’s upper mantle and affects the dynamics of the outer Earth. From previous work it has become apparent that if olivine rocks are plastically deformed to high strain, substantial weakening may occur before steady state mechanical behaviour is approached. This weakening appears directly related to progressive modification of the grain size distribution through competing effects of dynamic recrystallization and syn-deformational grain growth. However, most of our understanding of these processes in olivine comes from tests on coarse-grained materials that show grain size reduction through dynamic recrystallization. In the present study we focused on fine-grained (~1 µm) olivine aggregates (i.e., forsterite/Mg2SiO4), containing ~0.5 wt% water and 10 vol% enstatite (MgSiO3), Samples were axially compressed to varying strains up to a maximum of ~45%, at 600 MPa confining pressure and a temperature of 950°C. Microstructures were characterized by analyzing full grain size distributions and textures using SEM/EBSD. We observed syndeformational grain growth rather than grain size reduction, and relate this to strain hardening seen in the stress-strain curves.