The development of active and durable air electrodes is of great significance to the maturity of reversible protonic ceramic electrochemical cells (R‐PCECs). This article reports the recent findings in the performance enhancement of R‐PCECs using a novel heterostructured air electrode, consisting of a double perovskite PrBaCo1.6Fe0.2Nb0.2O5+δ backbone covered with in situ exsolved nanoparticles of Nb‐deficient PrBaCo1.6Fe0.2Nb0.2−xO5+δ. Such a heterostructured electrode is induced by the benign interaction of the electrode and steam during the cell operation, showing a faster surface exchange process, as confirmed by a mapping of high‐angle annular dark‐field transmission electron microscopy image, and distribution of relaxation time analyses of the electrochemical impedance spectra. The in situ formed Nb‐deficient nanoparticles and Nb‐rich parental perovskite significantly enhance the catalytic activity and durability of the air electrode toward oxygen reduction/evolution reaction on single cells at 650 °C, achieving a peak power density of 1.059 W cm−2 in fuel cell mode, a current density of 2.148 A cm−2 at 1.3 V in electrolysis cell mode, and good durability of a cycling test at ±0.5 A cm−2 for 200 h in dual modes of fuel cell and electrolysis cell.