Deformation and chemical reaction in granitoids at greenschist facies conditions were investigated in samples from three shear zones: two from the Alps (Corvatsch Granodiorite and Aiguilles Rouges Granite, Switzerland) and one from Eastern Australia (Wyangala Granite). When examined by light and electron microscopy, all show similar features of deformation that progressed from coarse parent rock through to fine grained mylonite: quartz deformed plastically, while both K-feldspar and plagioclase fractured and recrystallized in conjunction with chemical change, which had, as its end point, an assemblage albite + quartz +/- white mica +/- CaAl-silicates. K-feldspar and calcic plagioclase (depending on fluid chemistry) from the parent rock were unstable at low metamorphic grades in the presence of aqueous fluid. Since Ca-bearing plagioclase was not stable in these environments, myrmekite did not replace K-feldspar in any of the rocks examined. Recrystallization of feldspar, which should perhaps be termed neocrystallization, was initiated predominantly at clast margins or along microfractures that are marked by fluid inclusions and twin offsets. In old feldspar grains, particularly in plagioclases, dislocations exist in wall-like structures that are commonly associated with voids, suggesting origins in microfractures. These dislocations had severely limited mobility and subgrain rotation does not appear to have contributed to recrystallization. We conclude that recrystallization mainly occurred via a classical nucleation mechanism, with minor contributions from twin boundary migration. We argue that the 450-550-degrees-C lower limit for recrystallization of feldspar, referenced throughout the literature, is not applicable to the rock systems under investigation and should be discarded as a universal limit. Microfracturing, microboudinage and reaction are seen as the prerequisites for mylonite formation from coarse grained granitic rocks at low metamorphic grades (see part 11 of this paper). Neocrystallization, fluid access and nucleation appear to have accompanied, or immediately followed, the first deformation increments and were primarily responsible for continued grain size reduction. Transgranular fracture was comparatively important only at the onset of deformation. Since the formation of shear zones in granitoids commonly takes place under conditions of low metamorphic grade, in the presence of aqueous fluids in the Earth's crust, breakdown reactions and nucleation-recrystallization in feldspars may be important influences upon localization of deformation in granitoids.