High-capacity layered, lithium-rich oxide cathodes show great promise for use as positive electrode materials for rechargeable lithium ion batteries. Understanding the effects of oxygen activating reactions on the cathode's surface during electrochemical cycling can lead to improvements in stability and performance. We used in situ surfaced-enhanced Raman spectroscopy (SERS) to observe the oxygen-related surface reactions that occur during electrochemical cycling on lithium-rich cathodes. Here, we demonstrate the direct observation of Li2O formation during the extended plateau and discuss the consequences of its formation on the cathode and anode. The formation of Li2O on the cathode leads to the formation of species related to the generation of H2O together with LiOH and to changes within the electrolyte, which eventually result in diminished performance. Protection from, or mitigation of, such devastating surface reactions on both electrodes will be necessary to help realize the potential of high-capacity cathode materials (270 mAhg(-1) versus 140 mAhg(-1) for LiCoO2) for practical applications.