Two-dimensional multi-layered microstructure generated by hydrofluoric acid etching is essential for the high capacitance MXenes. However, the mechanisms dictating the formation, evolution and properties of MXenes during etching remain elusive due to the lack of direct observation. Herein, using ex-situ scanning electron microscopy combined with high resolution transmission electron microscopy, X-ray diffraction and X-ray photoelectron spectroscopy, we have revealed the fine variation of microstructure and properties of multi-layered titanium carbide Ti3C2Tx etched for different time. The results show that the laminar cracks always formed from the first initial laminar crack at the edge site of the outermost side of the Ti3AlC2 particle, which induces continuous nucleation of other laminar cracks in the nearby area. The early laminar cracks undergo growth accompanying with increased macro-layer density of Ti3C2Tx and the Al(F,O,C)3 precipitation in subsequent etching process. The formation of laminar cracks is revealed to be correlated with the release of local internal stress in Ti3AlC2. In addition, it is found that there are significant changes of Ti valence state, CC and Ti-C bonding as well as Ti-F, CO and Al-O surface groups during etching. Maximum specific capacitance coincides with maximum lattice parameter c of Ti3C2Tx and maximum number of macro-layers, while over-etching produces in-plane microcracks, Ti dissolution, and reduced specific capacitance. The results provide important insight to facilitate optimal synthesis of this material.