As a promising cathode material for high-energy-density lithium-ion batteries, Ni-rich lithium transition metal oxides, LiNi_1-x-yMn_xCo_yO₂, suffer from a number of problems, such as inferior cycling stability, poor safety, and gas generation, which greatly hinder their application in practical batteries. Despite much effort made previously, the mechanism for the above problems is still not well understood. Selecting LiNi_0.80Co_0.10Mn_0.10O₂ (NCM811) as an example, in this work we studied performance degradation of the Ni-rich layered cathode materials by cycling and float-charging Li/NCM811 cells in high voltage range (4.5 V and 4.7 V, respectively). It is found that nearly all the above problems can be linked to the oxidation of lattice oxygen occurring in the capacity region with respect to the H2→H3 phase transition. In addition to contributing to overall capacity, the oxidation of lattice oxygen results in irreversible loss of oxygen from the cathode material by means of oxygen evolution and relative reactions between the active oxygen evolution intermediates and electrolyte solvents. It is the loss of oxygen that results in irreversible layered-spinel-rocksalt phase transition, secondary particle crack, and capacity loss. The oxidation of lattice oxygen is an intrinsic property of the Ni-rich layered cathode materials at high state-of-charge states (corresponding to high potentials), which takes place not only on the surface but also in the bulk of the NCM materials. It is suggested that the priority for future research on such cathode materials should give to suppression of the oxygen evolution, and development of the anti-oxygen electrolytes that are chemically stable against the active oxygen evolution intermediates.