Millions of electric vehicles (EVs) on the road are powered by lithium-ion batteries (LIBs) based on nickel-rich layered oxide (NRLO) cathodes, and they suffer from a limited driving range and safety concerns. Increasing the Ni content is a key way to boost the energy densities of LIBs and alleviate the EV range anxiety, which are, however, compromised by the rapid performance fading. One unique challenge lies in the worsening of the microstructural stability with a rising Ni-content in the cathode. In this review, we focus on the latest advances in the understanding of NLRO microstructures, particularly the microstructural degradation mechanisms, state-of-the-art stabilization strategies, and advanced characterization methods. We first elaborate on the fundamental mechanisms underlying the microstructural failures of NRLOs, including anisotropic lattice evolution, microcracking, and surface degradation, as a result of which other degradation processes, such as electrolyte decomposition and transition metal dissolution, can be severely aggravated. Afterwards, we discuss representative stabilization strategies, including the surface treatment and construction of radial concentration gradients in polycrystalline secondary particles, the fabrication of rod-shaped primary particles, and the development of single-crystal NRLO cathodes. We then introduce emerging microstructural characterization techniques, especially for identification of the particle orientation, dynamic changes, and elemental distributions in NRLO microstructures. Finally, we provide perspectives on the remaining challenges and opportunities for the development of stable NRLO cathodes for the zero-carbon future.