This study reports the experimental observation of photothermally induced birefringence (PIB) in an optical nanofiber (NF). The PIB originates from the interaction between the azimuthally asymmetric evanescent field of a guided pump beam in HE 11 mode and the gas molecules surrounding the NF. Light absorption of gas molecules results in azimuthal inhomogeneity in gas density, which induces birefringence of the NF waveguide. The swift heat transfer and molecular transportation in sub-micrometer scale accounts for the fast response of the PIB with a measured rising and falling time within 9 and 70 ns, respectively. With a 12-mm-long NF, phase retardance as large as 3𝝅 is achieved. A theoretical model based on the rate equation is also developed for studying the photothermal dynamics and gas kinetics in PIB generation. This novel model is well consolidated by the numerical simulations, with the results agreeing well with the experiments. In consideration of the extremely low insertion loss, fast response, and reconfigurable principal axes of birefringence, the PIB can be used for all-optical polarization manipulation. In addition, NF with PIB can also be an interesting platform for studies of gas-surface interaction, light-sound interaction controlling, sub-micrometer scale heat and mass transfer, and molecular spectroscopy.