Using molecular dynamics simulations, we study dynamics of a model polymer melt composed of short chains with bead number N=10 in supercooled states. In quiescent conditions, the stress relaxation function G(t) is calculated, which exhibits a stretched exponential relaxation on the time scale of the alpha relaxation time tau(alpha) and ultimately follows the Rouse dynamics characterized by the time tau(R)similar toN(2)tau(alpha). After application of shear (gamma) over dot, transient stress growth sigma(xy)(t)/(gamma) over dot first obeys the linear growth integral(0)(t)dt(')G(t(')) for strain less than 0.1 but saturates into a non-Newtonian viscosity for larger strain. In steady states, shear thinning and elongation of chains into ellipsoidal shapes take place for shear (gamma) over dot larger than tau(R)(-1). In such strong shear, we find that the chains undergo random tumbling motion taking stretched and compact shapes alternatively. We examine the validity of the stress-optical relation between the anisotropic parts of the stress tensor and the dielectric tensor, which are violated in transient states due to the presence of a large glassy component of the stress. We furthermore introduce time-correlation functions in shear to calculate the shear-dependent relaxation times, tau(alpha)(T,(gamma) over dot) and tau(R)(T,(gamma) over dot), which decrease nonlinearly as functions of (gamma) over dot in the shear-thinning regime. (C) 2002 American Institute of Physics.