Although nephrite jade has been collected and treasured since the Stone Age, we lack a clear understanding of how it forms during deformation and metasomatism in shear zones. Using microstructural analysis of samples from Taiwan, California, and New Zealand, we propose a conceptual model for the evolution of nephrite jade that distinguishes four nephrite types based on mode of formation and textural characteristics: (1) primary (type 1a) or folded (type 1b) vein nephrite, (2) crenulated nephrite (type 2), (3) foliated semi-nephrite (type 3), and (4) nodular or domainal nephrite (type 4). We interpret the texture of our analysed samples to represent snapshots of a progressive textural evolution similar to that experienced by other deformed and fine-grained metamorphic rocks that develop under fluid-present, greenschist-facies conditions. Our observations suggest that types 2 and 3 nephrite can evolve from vein nephrite (type 1) by the development of crenulated and foliated metamorphic fabrics, during which the most important deformation process is dissolution–precipitation. However, development of metamorphic fabrics can be interrupted by transient brittle deformation, leading to the formation of type 4 nephrite that is characterised by nodular or angular clasts of nephrite in a nephritic matrix.