We have conducted a series of molecular-dynamics simulations on small two-dimensional crystallites and have observed a critical shear-mediated instability. At low reduced shear, the crystallite displays elastic response and recovers when the shear stress is removed. At higher shear stresses the crystallite deforms plastically and will sustain high strain (greater-than-or-equal-to 30%) without cleavage. The critical shear stress tau-c was found to be 0.28+/-0.03, which is in excellent agreement with a recent prediction (tau-c = 0.25) based on an extension of the Kosterlitz-Thouless-Halperin-Nelson-Young theory.