Layered lithium transition metal oxides derived from LiMO2 (M = Co, Ni, Mn, etc.) have been widely adopted as the cathodes of Li-ion batteries for portable electronics, electric vehicles, and energy storage. Oxygen loss in the layered oxides is one of the major factors leading to cycling-induced structural degradation and its associated fade in electrochemical performance. Herein, we review recent progress in understanding the phenomena of oxygen loss and the resulting structural degradation in layered oxide cathodes. We first present the major driving forces leading to the oxygen loss and then describe the associated structural degradation resulting from the oxygen loss. We follow this analysis with a discussion of the kinetic pathways that enable oxygen loss, and then we address the resulting electrochemical fade. Finally, we review the possible approaches toward mitigating oxygen loss and the associated electrochemical fade as well as detail novel analytical methods for probing the oxygen loss.