He was accused __________ theft.

The correct answer is B: of. This question assesses your knowledge of common prepositional phrases and idiomatic expressions in English. The verb "accuse" is almost always followed by the preposition "of" when referring to the charge or crime someone is alleged to have committed. The structure is typically "accuse someone of something." For example, "The police accused him of robbery," or "She was accused of cheating on the exam." This pairing of "accused" and "of" is a fixed collocation, meaning they frequently occur together and form a standard grammatical unit. Using other prepositions like 'with', 'from', or 'by' in this context would be grammatically incorrect and would sound unnatural to native speakers. While 'by' can indicate the agent (e.g., "He was accused by the prosecutor"), it does not connect the accusation to the specific crime. Therefore, to correctly state the charge, "of" is the only appropriate preposition.