van der Waals In 2 Se 3 has attracted significant attention for its room-temperature 2D ferroelectricity/antiferroelectricity down to monolayer thickness. However, instability and potential degradation pathway in 2D In 2 Se 3 have not yet been adequately addressed. Using a combination of experimental and theoretical approaches, we here unravel the phase instability in both α- and β'-In 2 Se 3 originating from the relatively unstable octahedral coordination. Together with the broken bonds at the edge steps, it leads to moisture-facilitated oxidation of In 2 Se 3 in air to form amorphous In 2 Se 3-3x O 3x layers and Se hemisphere particles. Both O 2 and H 2 O are required for such surface oxidation, which can be further promoted by light illumination. In addition, the self-passivation effect from the In 2 Se 3-3x O 3x layer can effectively limit such oxidation to only a few nanometer thickness. The achieved insight paves way for better understanding and optimizing 2D In 2 Se 3 performance for device applications.