Layered double hydroxides (LDHs) are potential catalysts for water oxidation, and it is recognized that they undergo dynamic evolution during the operation. However, little is known about the interfacial behaviors at the nanoscale under working conditions nor the underlying effects on electrocatalytic performance. Herein, using electrochemical atomic force microscopy, we in situ visualize the heterogeneous evolution of LDH nanosheets during oxygen evolution reaction (OER). By further combining density functional theory calculations, we elucidate the origin of the heterogeneous dynamics and their impact on the OER efficiency. Our findings demonstrate that NiCo LDHs transform to the catalytically active NiCoOx(OH)2-x phase during OER, and the redox transition between is accompanied by compressive and tensile strain, leading to in-plane contraction and reversible expansion of the nanosheets. Nonisotropic strain and out-of-plane strain relaxation due to defects and interparticle interactions result in cracking and wrinkling in the nanostructure, which is responsible for the partial activation and long-term deterioration of LDH electrocatalysts toward the OER. With this knowledge, we suggest and validate that engineering defects can precisely tune these dynamic behaviors, improving the OER activity and stability among LDH-based electrocatalysts.