Diamond is an attractive material due to its extreme hardness, high thermal conductivity, quantum optical, and biomedical applications. There is still much that is not understood about how diamonds form, particularly at room temperature and without catalysts. In this work, a new route for the formation of nanocrystalline diamond and the diamond‐like phase lonsdaleite is presented. Both diamond phases are found to form together within bands with a core‐shell structure following the high pressure treatment of a glassy carbon precursor at room temperature. The crystallographic arrangements of the diamond phases revealed that shear is the driving force for their formation and growth. This study gives new understanding of how shear can lead to crystallization in materials and helps elucidate how diamonds can form on Earth, in meteorite impacts and on other planets. Finally, the new shear induced formation mechanism works at room temperature, a key finding that may enable diamond and other technically important nanomaterials to be synthesized more readily.