Atomic-scale insights into phase transitions and structural dynamics of crystals in liquids are fundamental for understanding chemical, physical, and biological processes. Liquid-phase transmission electron microscopy (LP-TEM) integrates diffraction, imaging, and spectroscopy and has opened new opportunities to study nanoscale materials in liquid environments. Yet, atomic-scale electron crystallographic analysis of crystals in liquids remains elusive. Here, we establish sub-& Aring;ngstrom liquid-phase three-dimensional electron diffraction (LP-3D ED) for capturing phase transformation and determining atomic crystal structures in situ by exploiting nanochannel liquid cells. The well-defined and ultrathin liquid layers confined within the nanochannels enable the acquisition of 3D ED data at 0.80 & Aring; resolution from organic molecular crystals in liquids at room temperature. Using LP-3D ED combined with liquid flow control, we observe the beta-to-alpha phase transformation of glycine and in situ crystallization of a novel hydrated aluminum-glycine phase in aqueous solution in the nanochannels. We demonstrate ab initio crystal structure determination at sub-& Aring;ngstrom resolution by LP-3D ED, and identify a novel hexanuclear aluminum-hydroxide-glycine cluster in the in situ formed aluminum-glycine phase. This work demonstrates the capability of LP-3D ED to probe structural evolution and to reveal solvated crystal structures of nano- and microcrystals directly in liquid environments.