The transient response in metallic glass deformation is investigated via a mesoscale simulation by shear transformation zone dynamics. We directly connect the microscopic processes, i.e. shear transformation-induced free volume creation and diffusive rearrangement-induced free volume annihilation, to the macroscopic transient response. Notably, the dynamic competition between these processes gives rise to the signature stress overshoot in the homogeneous deformation regime at elevated temperatures; and the suppression of the annihilation process facilitates strain localization into a shear band at low temperatures.