The oxidation mechanism and thermal stability of nickel oxide (NiO)/carbon nanotube (CNT) composites were investigated by examining composites with different NiO contents by thermogravimetric analysis and transmission electron microscopy (TEM). NiO acts as a catalyst in the oxidation of CNT in the composite. CNTs can be oxidized, even in a vacuum, by reducing NiO to nickel at temperatures lower than the normal oxidation temperature of CNTs. This phase transition was confirmed directly by in situ heating TEM observations. In air, reduction by CNT occurs simultaneously with reoxidation by gaseous O2 molecules, and NiO maintains its phase. The thermal stability decreased with increasing NiO content because of defects in the CNT generated by the NiO loading.