The 2H-to-1T' phase transition in transition metal dichalcogenides (TMDs) has been exploited to phase-engineer TMDs for applications in which the metallicity of the 1T' phase is beneficial. However, phase-engineered 1T'-TMDs are metastable; thus, stabilization of the 1T' phase remains an important challenge to overcome before its properties can be exploited. Herein, we performed a systematic study of the 2H-to-1T' phase evolution by lithiation in ultrahigh vacuum. We discovered that by hydrogenating the intercalated Li to form lithium hydride (LiH), unprecedented long-term (>3 months) air stability of the 1T' phase can be achieved. Most importantly, this passivation method has wide applicability for other alkali metals and TMDs. Density functional theory calculations reveal that LiH is a good electron donor and stabilizes the 1T' phase against 2H conversion, aided by the formation of a greatly enhanced interlayer dipole-dipole interaction. Nonlinear optical studies reveal that air-stable 1T'-TMDs exhibit much stronger optical Kerr nonlinearity and higher optical transparency than the 2H phase, which is promising for nonlinear photonic applications.