In situ thermal expansion and in situ X-ray powder diffraction (XRD) are used to investigate the dynamic process of the interaction between Ni and methane at high temperature. Thermal expansion results show that it takes 68 min for the Ni and yttrium-stabilized zirconia (Ni-YSZ) cermet at 650 °C to collapse, while it takes only 14 min at 800 °C when exposed to methane. The crystal structure change of Ni, when it interacts with methane at high temperature, is directly observed by in situ XRD characterization. The results of scanning electron microscopy and transmission electron microscopy show a large number of carbon fibers on Ni particles in methane at 650 °C, whereas a considerable amount of encapsulating carbon and few carbon fibers are noted at 800 °C. On the basis of the experimental results, the deactivation mechanisms of Ni-YSZ cermet in methane at 650 °C and 800 °C are elucidated, respectively.