Bismuth based oxides exhibit outstanding oxygen ionic conductivity and fast oxygen surface kinetics and have shown great potential as a highly active component for electrode materials in solid oxide fuel cells (SOFC). Herein, a Nb-doped La0.6Sr0.4Co0.2Fe0.7Nb0.1O3-δ (LSCFNb) electrode with 40% Er0.4Bi1.6O3 (ESB) composite electrode was successfully fabricated by decoration method and directly assembled on barrier-layer-free yttrium stabilized zirconia (YSZ) electrolyte cells, achieving a peak power density of 1.32 W cm-2 and excellent stability ACS Applied Materials and Interfaces. 10 (47): 40549-40559 (2018). 2 at 750 o C and 250 mAcm-2 for 100 hrs. ESB decoration also significantly reduces the activation energy from 214 kJ mol-1 for the O2 reduction on pristine LSCFNb electrode to 98 kJ mol-1. Further microstructural analysis reveals that there is a redistribution and migration of the ESB phase in the ESB-LSCFNb composite towards the YSZ electrolyte under the influence of cathodic polarization, forming a thin ESB layer at the cathode/YSZ electrolyte interface. The in situ formed ESB layer not only prevents the direct contact and subsequent reaction between segregated SrO and YSZ electrolyte, but also remarkably promotes the oxygen migration/diffusion at the interface for O2 reduction reaction, resulting in a remarkable increase in power output and decrease in activation energy. The present study clearly demonstrated the in situ formation of a highly functional and active ESB protective layer at LSCFNb cobaltite cathode and YSZ electrolyte interface via ESB decorated LSCFNb composite cathode under SOFC operation conditions.