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Abstract It is shown that structural disorder—in the form of anisotropic, picoscale atomic displacements—modulates the refractive index tensor and results in the giant optical anisotropy observed in BaTiS₃, a quasi‐1D hexagonal chalcogenide. Single‐crystal X‐ray diffraction studies reveal the presence of antipolar displacements of Ti atoms within adjacent TiS₆chains along thec‐axis, and threefold degenerate Ti displacements in thea–bplane.^47/49Ti solid‐state NMR provides additional evidence for those Ti displacements in the form of a three‐horned NMR lineshape resulting from a low symmetry local environment around Ti atoms. Scanning transmission electron microscopy is used to directly observe the globally disordered Tia–bplane displacements and find them to be ordered locally over a few unit cells. First‐principles calculations show that the Tia–bplane displacements selectively reduce the refractive index along theab‐plane, while having minimal impact on the refractive index along the chain direction, thus resulting in a giant enhancement in the optical anisotropy. By showing a strong connection between structural disorder with picoscale displacements and the optical response in BaTiS₃, this study opens a pathway for designing optical materials with high refractive index and functionalities such as large optical anisotropy and nonlinearity.