In high-capacity layered oxide cathode materials, utilization of lattice oxygen as a redox center is considered to be one of the most promising approaches to overcome the capacity limitation set by conventional transition metal redox centers. However, rapid material degradation is often associated with oxygen oxidation, leading to formidable challenges in utilizing oxygen redox. Further mechanistic understanding of the oxygen activities thus becomes critical to better control oxygen redox reactions. This review summarizes recent advances for investigating oxygen redox reactions in cathode materials from a multiscale perspective, i.e., from the atomistic level to the microstructure regime. First the mechanistic aspects of oxygen redox and the consequences of this reaction on various electrode degradation pathways during battery operation (e.g., oxygen loss, transition metal migration, irreversible phase transition), relating structural changes at the crystallographic scale to those at the macro scale, are discussed. Then recent developments based on atomic and microstructure modifications that are promising for improving the reversibility of oxygen redox reaction or mitigating the harmful processes arising from oxidation of the oxygen centers under high operating voltage are recounted. The analysis is concluded with a commentary on further research directions toward optimizing the oxygen activity for high-capacity charge storage.