The air-sensitivity of transition metal oxide cathode materials (NaxTMO2, TM: transition metal) is a challenge for their practical application in sodium-ion batteries for large-scale energy storage. However, the deterioration mechanism of NaxTMO2 under ambient air is unclear, which hinders the precise design of air-stable NaxTMO2. Here, we revealed the origin of NaxTMO2 degradation by capturing the initial degradation status and microstructural evolution under ambient atmospheres with optimal humidity. It was found that the insertion of CO2 into Na layers along (003) planes of NaxTMO2 led to initial growth of Na2CO3 nanoseeds between TM layers, which initiated fast structure degradation with surface cracks and extrusion of Na2CO3 out of NaxTMO2. The degradation extents and pathways for NaxTMO2 could be highly associated with crystal orientation, particle morphology, and ambient humidity. Interestingly, the deteriorated NaxTMO2 could be completely healed through optimal recalcination, showing even improved air-stability and electrochemical performance. This work provides a helpful perspective on the interfacical structure design of high-performance NaxTMO2 cathodes for sodium-ion batteries.