The deformation and recovery of a poly(isobutylene) droplet with a lower viscosity embedded in a poly(dimethyl siloxane) matrix are directly observed from two directions after application of a large step shear strain. The droplet shape and recovery time strongly depended on the magnitude of the applied strain. Just after application of a large strain, a droplet deforms almost affinely to a flat ellipsoid. It then changes into a rodlike shape, a dumbbell, and to an ellipsoid of revolution, and finally to a sphere. Model calculations show that the primary driving force for the shape recovery is the interfacial energy in order to reduce the surface area of the deformed droplet.