Precision measurement of nonlinear observables is an important goal in all facets of quantum optics. This allows measurement-based non-classical state preparation, which has been applied to great success in various physical systems, and provides a route for quantum information processing with otherwise linear interactions. In cavity optomechanics much progress has been made using linear interactions and measurement, but observation of nonlinear mechanical degrees-of-freedom remains outstanding. Here we report the observation of displacement-squared thermal motion of a micro-mechanical resonator by exploiting the intrinsic nonlinearity of the radiation-pressure interaction. Using this measurement we generate bimodal mechanical states of motion with separations and feature sizes well below 100 pm. Future improvements to this approach will allow the preparation of quantum superposition states, which can be used to experimentally explore collapse models of the wavefunction and the potential for mechanical-resonator-based quantum information and metrology applications.