A new type of olivine fabric was found by high-strain simple-shear deformation experiments in the presence of trace amounts of water at ∼0.5–2.2 GPa and ∼1470–1570 K. In this fabric, called E-type fabric, the olivine  axis is subparallel to the shear direction, and the (001) plane is parallel to the shear plane; this geometry suggests that the (001) slip system makes the dominant contribution to total strain. This fabric is dominant at a modest water content, 200 < COH < 1000 H/106Si at low stresses and high temperatures. Some mylonites from peridotite massifs show this type of olivine fabric, which suggests the presence of water during the shear localization. The seismic anisotropy caused by this fabric is qualitatively similar to that by dry fabric (A type), but the magnitudes of anisotropy are different between the two types: for horizontal flow, the amplitude of VSH/VSV anisotropy is weaker, but the amplitude of shear-wave splitting is stronger for the E-type fabric than for the A-type dry fabric. Seismic anisotropy in the oceanic upper mantle may be due to the olivine E-type fabric.