Although deformation processes in submicron-sized metallic crystals are well documented, the direct observation of deformation mechanisms in crystals with dimensions below the sub-10-nm range is currently lacking. Here, through in situ high-resolution transmission electron microscopy (HRTEM) observations, we show that (1) in sharp contrast to what happens in bulk materials, in which plasticity is mediated by dislocation emission from Frank-Read sources and multiplication, partial dislocations emitted from free surfaces dominate the deformation of gold (Au) nanocrystals; (2) the crystallographic orientation (Schmid factor) is not the only factor in determining the deformation mechanism of nanometre-sized Au; and (3) the Au nanocrystal exhibits a phase transformation from a face-centered cubic to a body-centered tetragonal structure after failure. These findings provide direct experimental evidence for the vast amount of theoretical modelling on the deformation mechanisms of nanomaterials that have appeared in recent years.