Dynamic optical coherence elastography (OCE) tracks elastic wave propagation speed within tissue, enabling quantitative three-dimensional imaging of the elastic modulus. We show that propagating mechanical waves are mode converted at interfaces, creating a finite region on the order of an acoustic wavelength where there is not a simple one-to-one correspondence between wave speed and elastic modulus. Depending on the details of a boundary’s geometry and elasticity contrast, highly complex propagating fields produced near the boundary can substantially affect both the spatial resolution and contrast of the elasticity image. We demonstrate boundary effects on Rayleigh waves incident on a vertical boundary between media of different shear moduli. Lateral resolution is defined by the width of the transition zone between two media and is the limit at which a physical inclusion can be detected with full contrast. We experimentally demonstrate results using a spectral-domain OCT system on tissue-mimicking phantoms, which are replicated using numerical simulations. It is shown that the spatial resolution in dynamic OCE is determined by the temporal and spatial characteristics (i.e., bandwidth and spatial pulse width) of the propagating mechanical wave. Thus, mechanical resolution in dynamic OCE inherently differs from the optical resolution of the OCT imaging system.