Niobium is commonly used for superconducting quantum systems as readout resonators, capacitors, and interconnects. Structural defects at the Nb/Si and air/Nb interface may be a major source of two-level systems (TLS), which are detrimental to the device's coherence time. Thus, identifying and understanding the microscopic origin of possible TLS in Nb-based devices and their relationship to processing is key to superconducting qubit performance improvement. This work studied the structure and thermal stability of surface oxide on physical vapor deposited Nb films on Si wafers, using aberration-corrected (scanning) transmission electron microscopy and spectroscopy. All Nb films exhibit columnar growth with strong [110] textures. After in-situ heating of the heterostructure at 360 °C inside the microscope, the initial amorphous niobium surface oxides decompose into face-centered cubic Nb nanograins in the amorphous Nb-O matrix, which may reduce microwave dissipation. Despite changes in the microstructure and chemistry of the niobium oxide surface layer due to heat treatment, the interface between the Nb and the surface oxide layer remains almost unchanged. Our comprehensive study of the Nb surface oxide decomposition mechanism may guide future superconducting qubit device optimization through interfacial scattering center and TLS minimization.