The moisture‐induced structural decomposition of lead halide perovskites is the major challenge in solar cells and light‐emitting diodes based on perovskites as the active material. The presence of moisture results in the structural conversion of cubic 3D CsPbBr3 nanocrystals to 2D CsPb2Br5 nanosheets before its decomposition to PbBr2. The capping agent used, oleyl amine, plays a crucial role in this structural transformation. The presence of moisture converts the capping agent, oleyl amine, to its salt, which transforms the 3D CsPbBr3 perovskite nanocrystals to 2D CsPb2Br5 nanosheets. Further, these CsPb2Br5 nanosheets decompose to trigonal PbBr2, in the presence of higher amounts of water. Also, the amount of capping agent, oleyl amine, plays an important role in the rate of moisture‐induced structural transformations. The rate of decomposition increases with the amount of oleyl amine used as a result of the reaction of water with the excess ligands. By revealing the exact mechanism of the structural alterations in the presence of water, new design strategies can be used to prevent the decomposition of perovskites.