The Ni-rich layered cathode materials LiNixCoyMn1-x-yO2 (NCM), which have a high energy density, are crucial in the strategic formulation of next-generation high-performance lithium-ion batteries (LIBs), particularly for cathode materials with Ni ≥ 0.9. Although advances in NCM cathodes have made them competitive in terms of capacity and cost, persistent challenges such as surface chemical instability (electrolyte-driven surface degradation) and poor mechanical integrity (lattice oxygen evolution and anisotropic microcracking) of the cathodes remain. Addressing these limitations requires coordinated strategies spanning from atomic-level dopant engineering to macroscopic electrode architectural innovations to enable viable large-scale deployment. Extensive research has been conducted on the structural instability caused by an increase in the Ni content, but a comprehensive understanding of its underlying mechanisms and effective modification strategies for next-generation nickel-rich cathodes is lacking. Hence, we provide a thorough overview of the latest findings on microstructural degradation mechanisms in Ni-rich cathodes, delve into recent effective modification strategies and cutting-edge characterization methods, and finally, examine future research directions and limitations. This review elucidates the challenges facing ultrahigh-nickel cathodes and offers new insights into promising research avenues.