Ultrahigh‐Ni layered oxides hold great promise as high‐energy‐density cathodes at an affordable cost for lithium‐ion batteries, yet their practical application is greatly hampered by the poor cyclability. Herein, by employing LiNi0.94Co0.06O2 as a model cathode in a full‐cell configuration, the interphasial and structural evolution processes of ultrahigh‐Ni layered oxides are systematically investigated over the course of their service life (1500 cycles). By applying advanced analytic techniques (e.g., Li‐isotope labeling, region‐of‐interest method), the dynamic chemical evolution on the cathode surface is revealed with spatial resolution, and the correlation between lattice distortion and cathode surface reactivity is established. Benefiting from in situ X‐ray diffraction (XRD) analysis, the ultrahigh‐Ni layered oxide is demonstrated to undergo dual‐phase reaction mechanisms with huge lattice variation, which leads to a decrease in crystallinity and secondary particle pulverization. Furthermore, the critical impact of cathode surface reaction on the graphite anode–electrolyte interphase (AEI) is revealed at nanometer scale, and a universal chemical/physical evolution process of the AEI is illustrated, for the first time. Finally, the practical viability of ultrahigh‐Ni layered oxides is demonstrated through Al‐doping strategy. This work presents a comprehensive understanding of the structural and interphasial degradation of ultrahigh‐Ni layered oxide cathodes for developing high‐energy‐density lithium‐ion batteries.