The increasing number of spent lithium-ion batteries has raised growing concerns regarding resource supply and environmental impacts, making the efficient recycling of high-value cathode materials an important issue in battery research. This review examines the relationship between material degradation and recycling strategy, highlighting that the recycling route should be selected according to the actual failure features of the cathode. Major degradation modes, including lithium loss, surface/interface deterioration, transition-metal dissolution, structural disorder, and phase reconstruction, are first summarized, followed by discussion of their effects on different recycling approaches. On the basis of these analyses, a mechanism-guided framework for strategy selection is proposed. The review also briefly discusses the possible role of artificial intelligence and digital twin technologies in improving failure diagnosis, process design, and recycling optimization, with the aim of promoting efficient and sustainable closed-loop recycling of spent cathodes.