Doped LiNiO2 has recently become one of the most promising cathode materials for its high specific energy, long cycle life, and reduced cobalt content. Despite this, the degradation mechanism of LiNiO2 and its derivatives still remains elusive. Here, by combining in situ electron microscopy and first-principles calculations, we elucidate the atomic-level chemomechanical degradation pathway of LiNiO2-derived cathodes. We uncover that the O1 phase formed at high voltages acts as a preferential site for rock-salt transformation via a two-step pathway involving cation mixing and shear along (003) planes. Moreover, electron tomography reveals that planar cracks nucleated simultaneously from particle interior and surface propagate along the [100] direction on (003) planes, accompanied by concurrent structural degradation in a discrete manner. Our results provide an in-depth understanding of the degradation mechanism of LiNiO2-derived cathodes, pointing out the concept that suppressing the O1 phase and oxygen loss is key to stabilizing LiNiO2 for developing next-generation high-energy cathode materials.