Phase separation processes following high‐rate extension in unentangled polymer solutions are studied theoretically. The flow‐induced demixing is associated with the coil–stretch transition predicted in high‐molecular‐weight polymer solutions at high‐enough Weissenberg numbers. The developed mean‐field theory is valid in the dilute/semidilute solution regime, where the stretched coils overlap strongly. We elucidate and discuss the main kinetic stages of the polymer/solvent separation process including (i) growth of concentration fluctuations and formation of oriented protofibrils by anisotropic spinodal decomposition; (ii) development of well‐defined highly oriented and stiff fibrils forming an anisotropic network (cross‐linked fiber); (iii) microphase separation and lateral collapse of the network yielding dense oriented fiber. These novel predictions are in qualitative agreement with the experimental data. © 2017 Wiley Periodicals, Inc. J. Polym. Sci., Part B: Polym. Phys. 2017, 55, 623–637