We investigate the depth distribution of smectite clay transformation and its along‐strike variability at the Middle America Trench offshore Costa Rica. We take advantage of recent well‐constrained thermal models that refine our understanding of the margin's thermal structure and which capture significant along‐strike variability. Using these thermal models, together with sediment compositions defined by drilling, we compute the distribution of smectite transformation and associated fluid production. We show that the hypocenters of large (M > 6.9) well‐located megathrust earthquakes lie consistently downdip of peak fluid production. We suggest that silica cementation associated with smectite transformation promotes lithification and slip‐weakening behavior that, in combination with declining fluid pressures, facilitate the initiation of unstable slip. The earthquake ruptures extend updip into the region of peak reaction, possibly due to excess pore pressures that facilitate their propagation. These results are consistent with the hypothesis that smectite transformation contributes to the onset of stick‐slip behavior and acts as an important control on earthquake nucleation and propagation.