Some layered magnetic materials like Cr₂Ge₂Te₆ sustain magnetic long range order even in the atomically thin limit and have sparked intense research efforts to implement them in nano-spintronic devices. On the other hand, there are serious practical obstacles to such plans due to their poor environmental stability. In order to actively prevent rapid degradation a microscopic understanding of the involved reactions and energy scales is needed. Here we perform an in-depth investigation of the Cr₂Ge₂Te₆ surface by X-ray photoemission spectroscopy in combination with density functional theory. We find that the surface degradation is driven by germanium oxidation. Tellurium oxidation proceeds in two steps involving an intermediate state of partial oxidation. Oxidation starts rapidly at the fresh surface but slows down afterwards continuously. Our results single out germanium and its vicinity as the main driver of the initial steps of surface degradation of Cr₂Ge₂Te₆. Future strategies to enhance the lifetime of the Cr₂Ge₂Te₆ surface or thin flakes should, therefore, concentrate on the chemical or physical passivation of those.