Li‐ion rechargeable battery, the prevailing market leader for energy storage applications throughout the past few decades, needs to be improved greatly in terms of capacity, cycling performance, and safety to cater future generation energy requirements. The failure of electrode materials, which leads to early capacity decay and safety issues in existing Li‐ion batteries, however, is still a technical challenge and deserves further investigation. In this review, recent advances in how in situ characterization techniques can be adopted to understand material failure mechanisms in Li‐ion battery are highlighted with a focus on failure and degradation of negative electrode materials. The information presented in this article is believed to be beneficial to application of advanced in situ characterization techniques in the development of next‐generation battery systems with improved electrochemical properties and structural integrity.