Sodium-ion batteries (SIBs) are considered strong competitors to lithium-ion batteries (LIBs) due to their low cost and safety advantages. Layered transition metal oxides (LTMOs), characterized by simple synthesis and high specific capacity, are regarded as the most promising cathode materials for SIBs. However, structural limitations of LTMOs, such as irreversible phase transitions, Jahn-Teller effects, TM ions migration, interfacial side reactions, reactive oxygen loss, and air instability, hinder their commercialization. This review systematically describes these challenges affecting structural stability and electrochemical performance, summarizes recent advancements in modification strategies, and outlines future directions for LTMOs development. By comprehensively analyzing LTMOs, this work aims to provide theoretical insights to facilitate the large-scale commercial application of SIBs.