Lithium-ion batteries (LIBs) have been widely used in mobile devices, energy storage power stations, medical equipment, and other fields, became an indispensable technological product in modern society. However, the capacity degradation of LIBs limits their long-term deployment, which is not conducive to saving resources. What is more, it will lead to safety problems when the capacity of the battery is degraded. Failure of the battery is a key issue in the research and application of LIBs. Faced with the problem of capacity degradation, various aspects of LIBs have been studied. This paper reviews the electrochemical degradation mechanism of LIBs’ life fade, detection technologies for battery failure, methods to regulate battery capacity degradation, and battery lifetime prognostics. Finally, the development trend and potential challenges of battery capacity degradation research are prospected. All the key insights from this review are expected to advance the research on capacity fading and lifetime prediction techniques for LIBs.