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Nanostructured (NS) metals typically fail soon after yielding, starting with the formation of narrow shear bands. Here we report the observation of shear band delocalization in gradient metals. Shear bands were nucleated and delocalized in the NS layers by propagating along the gage length soon after yielding, converting the shear band into a localized strain zone (LSZ). Synergistic work hardening was developed in the LSZ by regaining dislocation hardening capability, and by back-stress hardening from the strain gradients in the axial and depth directions, which helped with enhancing global ductility.