The dissolution of transition metals (TMs) from LiMO2 (M = Ni, Co, Mn) cathodes and their subsequent side reactions on the anode and in the electrolyte result in Li-ion battery capacity and power losses. Despite the importance of this process, the lack of adequate analysis methods for tracking the subtle compositional changes at specific locations with nano-meter spatial resolution has prevented the elucidation of its microstructural origin and mechanism. Herein, we studied the dissolution of TMs from a Ni-rich layered cathode and investigated their deposition on a graphite anode and reactions with the electrolyte, with focus on the microstructural aspects. Changes in TM and oxygen contents in Ni-rich LiNi0.87Co0.09Mn0.04O2 (NCM) cathode materials were two-dimensionally visualized on a micro-scale gathering by nano-scale analysis, which enabled high-resolution particle analysis, through transmission electron microscopy coupled with X-ray energy dispersive spectroscopy. Degraded (capacity retention < 80%) NCM particles featuring grain-boundary cracking caused by repeated volume expansion/contraction upon charge/discharge exhibited compositions similar to that of pristine particles, whereas sectionalized chemical composition mapping revealed that broken and pulverized NCM particles, i.e., those very heavily fractured and broken in such a way as to directly expose the particle surface to the electrolyte, exhibited decreased TM contents. Therefore, TM dissolution was concluded to occur at the cathode material–electrolyte interface and be one of the main reasons of electrode material degradation.