Given that the non‐aqueous electrolyte in Li‐ion battery plays a specific role as an ion‐transport medium and interfacial modifier for both cathode and anode, understanding and evaluating the evolution and degradation of electrolytes throughout the life cycle is a fundamental concern within the lithium‐ion battery (LIB) community. This article provides a comprehensive overview of the electrolyte decomposition processes, mechanisms, effects of electrolyte degradation on the battery performance, characterization techniques, and modeling analysis. First, it thoroughly discusses the processes and mechanisms involved in electrolyte degradation from two primary perspectives: 1) the formation of the electrode‐electrolyte interphase and 2) the decomposition of the bulk electrolyte. Subsequently, it systematically outlines the effects of electrolyte degradation on the battery performance. The article further introduces cutting‐edge characterization and detection techniques used to assess electrolyte degradation, with a specific emphasis on quantitative methods for analyzing residual electrolytes in practical cells. Moreover, it summarizes advanced physical models of electrolyte decomposition. Finally, the paper concludes by offering insights into future trends and potential challenges in battery degradation research, it offers valuable references and guidance for further exploration of electrolyte degradation in LIBs.