With the continuous soar of CO2 emission exceeding 360 Mt over the recent five years, new-generation CO2 negative emission energy technologies are demanded. Li-CO2 battery is a promising option as it utilizes carbon for carbon neutrality and generates electric energy, providing environmental and economic benefits. However, the ultraslow kinetics and high cost of pure CO2 have made its application controversial. By O2 motivation, the O2-assisted Li-CO2 battery (LOCB) breaks through the performance/engineering bottleneck of the Li-CO2 battery, enabling industrial CO2 utilization with a higher practical operating voltage of 2.65 V, longer stability of 700 cycles, and superior specific energy of over 2000 Wh kg-1. The introduction of oxygen induces more complex physicochemical processes and consequently poses challenges in developing a comprehensive understanding. This work provides an updated mechanistic understanding of the LOCB, assesses the battery environment and configuration of common materials used in device architectures, and simulation and modeling methods. We highlight the crucial challenges, strategies, and perspectives for future LOCB and even metal-CO2/O2 batteries to facilitate industrial upgrading. From a holistic perspective, the practical implementation of LOCB should consider the unified fabricate/testing protocol, O2 regulation strategy, component/structure design, and theory innovation.