The crystallographic preferred orientation (CPO) of olivine, specifically the type‐B characterized by c‐axes aligned parallel to lineation and b‐axes concentrated perpendicular to foliation, is essential for explaining the trench‐parallel seismic anisotropy in the forearc regions of subduction zones. However, its origin remains a subject of ambiguity and controversy. In this study, we present experimental findings on the formation of a type‐B olivine CPO through the dehydration of foliated serpentinite under a compressive stress at a pressure of 300 MPa and temperature of 700–750°C. Our results reveal a progressive evolution of olivine CPO, transitioning from a type‐C fabric to a type‐B fabric, with increasing grain size and dehydration level. The type‐B CPO observed in coarse‐grained olivine within fully dehydrated samples primarily arises from mechanisms involving anisotropic growth, grain rotation, and oriented coalescence of newly formed, small olivine grains following the decomposition of antigorite under a compressive stress. This study provides the first experimental evidence for a novel, low‐temperature dynamic dehydration mechanism, in contrast to the mechanism of high‐temperature plastic flow, for explaining the development of type‐B olivine CPO in forearc regions. Hence, it contributes significantly to our understanding of the formation of olivine CPO with implications for seismic anisotropy in subduction zone forearcs.