Capacity degradation by phase changes and oxygen evolution has been the largest obstacle for the ultimate commercialization of high‐capacity LiNiO2‐based cathode materials. The ultimate thermodynamic and kinetic reasons of these limitations are not yet systematically studied, and the fundamental mechanisms are still poorly understood. In this work, both phenomena are studied by density functional theory simulations and validation experiments. It is found that during delithiation of LiNiO2, decreased oxygen reduction induces a strong thermodynamic driving force for oxygen evolution in bulk. However, oxygen evolution is kinetically prohibited in the bulk phase due to a large oxygen migration kinetic barrier (2.4 eV). In contrast, surface regions provide a larger space for oxygen migration leading to facile oxygen evolution. These theoretical results are validated by experimental studies, and the kinetic stability of bulk LiNiO2 is clearly confirmed. Based on these findings, a rational design strategy for protective surface coating is proposed.