The thermal stability and oxidation of layer-structured rhombohedral In3Se4 nanostructures have been investigated. In-situ synchrotron X-ray diffraction in a sealed system reveals that In3Se4 has good thermal stability up to 900 °C. In contrast, In3Se4 has lower thermal stability up to 550 or 200 °C when heated in an atmosphere flushed with Ar or in air, respectively. The degradation mechanism was determined to be the oxidation of In3Se4 by O2 in the heating environment. This research demonstrates how thermal processing conditions can influence the thermal stability of In3Se4, suggesting that appropriate heating environment for preserving its structural integrity is required.