The collective redox activities of transition‐metal (TM) cations and oxygen anions have been shown to increase charge storage capacity in both Li‐rich layered and cation‐disordered rock‐salt cathodes. Repeated cycling involving anionic redox is known to trigger TM migration and phase transformation in layered Li‐ and Mn‐rich (LMR) oxides, however, detailed mechanistic understanding on the recently discovered Li‐rich rock‐salt cathodes is largely missing. The present study systematically investigates the effect of oxygen redox on a Li1.3Nb0.3Mn0.4O2 cathode and demonstrates that performance deterioration is directly correlated to the extent of oxygen redox. It is shown that voltage fade and hysteresis begin only after initiating anionic redox at high voltages, which grows progressively with either deeper oxidation of oxygen at higher potential or extended cycling. In contrast to what is reported on layered LMR oxides, extensive TM reduction is observed but phase transition is not detected in the cycled oxide. A densification/degradation mechanism is proposed accordingly which elucidates how a unique combination of extensive chemical reduction of TM and reduced quality of the Li percolation network in cation‐disordered rock‐salts can lead to performance degradation in these newer cathodes with 3D Li migration pathways. Design strategies to achieve balanced capacity and stability are also discussed.