Terminal blended rubberized asphalt binder (TB) technology, which blends crumb tire rubber (CR) with asphalt under high interaction conditions, offers a promising waste tire recycling solution for pavement construction. By precisely controlling the degradation progress of CR, it is possible to prepare TB with specific property requirements. However, the degradation progress of CR and its impact on TB property during the TB preparation process remain ambiguous. This hinders the potential for efficient preparation of TB with specific property requirements. This study aims to understand the degradation progress of TB by analyzing binders, soluble fractions, and insoluble fractions obtained at various interaction durations. Microscopic analysis characterizes the chemical composition, morphology, and molecular weight distribution of insoluble and soluble fractions, while macroscopic analysis evaluates the solubility, viscosity, compatibility, and mechanical properties of binders. The results reveal that the degradation of CR during the preparation of TB consists of a desulfurization reaction, depolymerization reaction, and release behavior (carbon black and fillers). Depending on the degradation progress of CR, the interaction process can be classified into three stages: initial (desulfurization reaction dominant stage), middle (depolymerization reaction dominant stage), and last (release behavior dominant stage). The desulfurization reaction of CR is almost completed in the initial stage. The depolymerization reactions and release behavior occur throughout the process. The most pronounced depolymerization reactions occur in the initial stage for natural rubber and in the middle stage for synthetic rubber, while the most significant release behavior occurs in the last stage. Accordingly, in the initial stage, TB shows a rapid evolution in macro properties due to the significant development of degradation reactions, specifically, the notable improvement in viscosity, compatibility, and low-temperature properties, as well as the substantial deterioration in high-temperature properties. In the middle stage, the degradation reaction develops further but slower, with TB exhibits a further but slower evolution in macro properties. In the last stage, the degradation reaction is almost completed, and TB shows a gradual stabilization of macro properties. The findings are expected to achieve precise control of CR degradation progression, which offers the possibility of efficient preparation of TB with specific properties, thus advancing the application of CR in pavement engineering.