The origin of the observed Band-like photon spectrum in short gamma-ray bursts (sGRBs) is a long-standing mystery. We carry out the first general relativistic magnetohydrodynamic simulation of an sGRB jet with initial magnetization σ
0 = 150 in dynamical ejecta from a binary merger. From this simulation, we identify regions along the jet of efficient energy dissipation due to magnetic reconnection and collisionless subshocks. Taking into account electron and proton acceleration processes, we solve for the first time the coupled transport equations for photons, electrons, protons, neutrinos, and intermediate particle species up to close to the photosphere (i.e., up to 1 × 1012 cm), accounting for all relevant radiative and cooling processes. We find that the subphotospheric multimessenger signals carry strong signatures of the hadronic interactions and their resulting particle cascades. Importantly, the spectral energy distribution of photons is significantly distorted with respect to the Wien one, commonly assumed below the photosphere. Our findings suggest that the bulk of the nonthermal photon spectrum observed in sGRBs can stem from hadronic processes occurring below the photosphere and previously neglected, with an accompanying energy flux of neutrinos peaking in the GeV energy range.