Cathode　electrolyte　interphase　(CEI)　layer　plays　a　crucial　role　in　determining　the　electrochemical　performance　of　lithium-ion　batteries.　Limited　by　the　sensitive　nature　of　CEI　and　the　lack　of　characterization　techniques,　its　dynamic　evolution　during　cycling,　its　formation　mechanism,　and　its　specific　impact　on　battery　performance　are　not　yet　fully　understood.　Herein,　we　systematically　investigate　the　dynamic　evolution　of　CEI　layer　and　its　critical　effect　on　the　cycling　performance　of　LiCoO2　cathode　by　diverse　characterization　techniques.　We　find　that　cycling　voltage　plays　a　key　role　in　affecting　CEI　formation　and　evolution,　and　a　critical　potential　(4.05　V　vs.　Li)　is　identified,　which　acts　as　the　switching　potential　between　CEI　deposition　and　decomposition.　We　show　that　CEI　starts　deposition　in　the　discharge　process　when　the　potential　is　below　4.05　V,　and　CEI　decomposition　occurs　when　the　potential　is　higher　than　4.05　V.　When　the　battery　is　cycled　below　such　a　critical　potential,　a　stable　CEI　layer　is　developed,　which　leads　to　superior　cycling　stability.　When　the　battery　is　cycled　above　such　a　critical　potential,　a　CEI-free　cathode　interface　is　observed,　which　also　demonstrates　good　cycle　stability.　However,　when　the　critical　potential　falls　in　the　cycling　voltage　range,　CEI　deposition　and　decomposition　are　repeatedly　switched　on　during　cycling,　leading　to　the　dynamically　unstable　CEI　layer.　The　unstable　CEI　layer　causes　continuous　interfacial　reaction　and　degradation,　resulting　in　battery　performance　decay.　Our　work　deepens　the　understanding　of　the　CEI　formation　and　evolution　mechanisms,　and　clarifies　the　critical　effect　of　CEI　layer　on　cycling　performance,　which　provides　new　insights　into　stabilizing　the　electrode–electrolyte　interface　for　high-performance　rechargeable　batteries.　©　2023　Science　Press　and　Dalian　Institute　of　Chemical　Physics,　Chinese　Academy　of　Sciences