We report on an unprecedented formation of allotrope heterostructured Si nanowires by plastic deformation based on applied radial compressive stresses inside a surrounding matrix. Si nanowires with a standard diamond structure (3C) undergo a phase transformation toward the hexagonal 2H-allotrope. The transformation is thermally activated above 500 °C and is clearly driven by a shear-stress relief occurring in parallel shear bands lying on {115} planes. We have studied the influence of temperature and axial orientation of nanowires. The observations are consistent with a martensitic phase transformation, but the finding leads to clear evidence of a different mechanism of deformation-induced phase transformation in Si nanowires with respect to their bulk counterpart. Our process provides a route to study shear-driven phase transformation at the nanoscale in Si.