Layered two-dimensional (2D) black phosphorus (BP) exhibits novel semiconducting properties including a tunable bandgap and high electron mobility. However, the poor stability of BP in ambient environment severely limits potential for application in future electronic and optoelectronic devices. While passivation or encapsulation of BP using inert materials/polymers has emerged as a plausible solution, a detailed fundamental understanding of BP's reaction with oxygen is imperative to rationally advance its use in applications. Here, we use in situ environmental transmission electron microscopy to elucidate atomistic structural changes in mechanically exfoliated few-layered BP during exposure to varying partial pressures of oxygen. An amorphous oxide layer is seen on the actively etching BP edges, and the thickness of this layer increases with increasing oxygen partial pressure, indicating that oxidation proceeds via initial formation of amorphous PxOy species which sublime to result in the etching of the BP crystal. We observe that while few-layered BP is stable under the 80 kV electron beam (e-beam) in vacuum, the lattice oxidizes and degrades at room temperature in the presence of oxygen only in the region under the e-beam. The oxidative etch rate also increases with increasing e-beam dosage, suggesting the presence of an energy barrier for the oxidation reaction. Preferential oxidative etching along the [0 0 1] and [0 0 1] crystallographic directions is observed, in good agreement with density functional theory calculations showing favorable thermodynamic stability of the oxidized BP (0 0 1) planes compared to the (1 0 0) planes. We expect the atomistic insights and fundamental understanding obtained here to aid in the development of novel approaches to integrate BP in future applications.