Na2Ti3O7 has attracted significant attention due to its ecofriendliness and cost-effectiveness for sodium-ion batteries. However, their limited cycling stability hampers their practical applications. Herein, we elucidate a mechanism of structural degradation caused by the heterogeneous phase transition in the Na2Ti3O7 anode using aberration-corrected (scanning) transmission electron microscopy (S)TEM and in situ TEM. It is found that the unevenly distributed phase transition results in the accumulation of strain, which promotes the growth of microcracks and eventually leads to structural decomposition and electrochemical failure. Motivated by this degradation mechanism, nanowires were proposed, and the structural stability is thus improved with the lattice strain effectively released. These findings deepen our understanding of ion transport and degradation mechanisms in intercalated layered electrode materials while emphasizing the significance of the material structure engineered for improving electrode performance.