Crystal–crystal (c–c) transitions are often induced by large shear deformation, but the microscopic kinetics associated with c–c transitions are difficult to experimentally observe and are poorly understood theoretically. Here, we drive shear-induced phase transitions from square ($\square$) lattices to triangular ($\triangle$) lattices and directly observe the accompanying kinetics with single-particle resolution inside the bulk crystal. For relatively small oscillatory shear strain amplitude, γm < 0.1, the initial nucleation is martensitic, and the late-stage growth exhibits shear-coupled interface propagation. By contrast, for large shear strain, 0.1 < γm < 0.4, liquid nuclei form first, and then $\triangle$-lattice nuclei crystallize within liquid nuclei; $\triangle$-lattice nuclei are surrounded by a liquid layer throughout their growth due to localised shear strain at the interface; large localized strain enables the Lindemann melting criterion to be reached locally and drives virtual melting. Such virtual melting and interface propagation induced shear phenomena have been predicted in theory and simulation, but have not been observed in experiment.