Perovskite solar cells (PSCs) based on formamidinium (FA⁺) lead tri-halide (FAPbI₃) have achieved remarkable power conversion efficiencies exceeding 26%. However, both achieving commercially available device stability and reaching the Shockley–Queisser limit remain significant challenges. Additionally, the degradation mechanisms of FAPbI₃-based PSCs are inadequately understood in relation to the association between fragmented FA⁺ and variations in the properties of crystals and energy bands. In this study, a comprehensive analysis based on grazing incidence wide-angle X-ray diffraction revealed a substantial mismatch between the microstrain and dislocation density, attributable to the formation of local intragrain planar defects during the thermal degradation of metal halide perovskite (MHP) films. Further analysis based on X-ray photoemission spectroscopy indicated an initial redistribution of anions, followed by the detrimental decomposition of the A-cation, resulting in potential by-products owing to the thermal dissociation of FA⁺ within the MHP film. Exceeding the performance limit for FA⁺ dissociation, the degradation of the MHP film induced a significant change in the valence band owing to the prevalence of fragmented FA⁺ and vapourization of halide within the MHP film. The widening of the charge inversion layer in the MHP film can be caused by an increase in by-product substitutions. Our study provides valuable insights for enhancing the commercial viability of improving the overall performance of PSCs.