Ferroelectric properties of Hf0.5Zr0.5O2 are strongly correlated with its crystallographic orientation, with the [001] direction serving as the polar axis. However, the epitaxial growth of highly polar‐axis‐oriented Hf0.5Zr0.5O2 layers with pronounced ferroelectricity is rarely reported. Here epitaxial (001)‐oriented Hf0.5Zr0.5O2 thin films grown by atomic layer epitaxy (ALE) is demonstrated, which achieve a state‐of‐the‐art ferroelectric polarization up to 78.9 µC cm−2. The epitaxial Hf0.5Zr0.5O2 layer experiences a lattice reorientation from (010) to (001) during the wake‐up process, as evidenced by plane‐view precession electron diffraction. Accordingly, a two‐step, 90° ferroelastic domain switching model is proposed to elucidate multiple polarization switching. Furthermore, the observed polarization switching dynamics closely match with the time‐resolved negative capacitance, which is quantified as an equivalent high dielectric constant of −170. This study highlights the capability of ALE to precisely control the crystallographic orientation of Hf0.5Zr0.5O2 thin films, providing deep insights into fundamental ferroelectric mechanisms.