AbstractLike all rechargeable battery systems, conventional Li‐ion batteries (LIB) inevitably suffer from capacity losses during operation. This also holds for all‐solid‐state LIB. In this contribution an in operando neutron depth profiling method is developed to investigate the degradation mechanism of all‐solid‐state, thin film Si–Li3PO4–LiCoO2 batteries. Important aspects of the long‐term degradation mechanisms are elucidated. It is found that the capacity losses in these thin film batteries are mainly related to lithium immobilization in the solid‐state electrolyte, starting to grow at the anode/electrolyte interface during initial charging. The Li‐immobilization layer in the electrolyte is induced by silicon penetration from the anode into the solid‐state electrolyte and continues to grow at a lower rate during subsequent cycling. X‐ray photoelectron spectroscopy depth profiling and transmission electron microscopy analyses confirm the formation of such immobilization layer, which favorably functions as an ionic conductor for lithium ions. As a result of the immobilization process, the amount of free moveable lithium ions is reduced, leading to the pronounced storage capacity decay. Insights gained from this research shed interesting light on the degradation mechanisms of thin film, all‐solid‐state LIB and facilitate potential interfacial modifications which finally will lead to substantially improved battery performance.