Potassium-ion batteries (PIBs) have attracted increasing interest as promising alternatives to lithium-ion batteries (LIBs) in large-scale electrical energy storage systems due to the potential price advantages, abundant availability of potassium resources, and low standard redox potential of potassium. However, the pursuit of suitable cathode materials that exhibit desirable characteristics such as voltage platforms, high capacity, and long cycling stability is of utmost importance. Recently, layered transition-metal oxides for PIBs offer great potential due to their high theoretical capacity, suitable voltage range, and eco-friendliness. Nevertheless, the progress of KMO cathodes in PIBs faces obstacles due to the detrimental effects of structural disorder and irreversible phase transitions caused by the Jahn-Teller effect. This review provides a brief description of the origin and mechanism of the Jahn-Teller effect, accompanied by the proposed principles to mitigate this phenomenon. In particular, the current status of KMO cathodes for PIBs, is summarized highlighting the challenges posed by the Jahn-Teller effect. Furthermore, promising strategies, such as composition modulation, synthesis approaches, and surface modification, are proposed to alleviate and suppress the Jahn-Teller effect. These strategies offer valuable insights into the prospects of innovative cathode materials and provide a foundation for future research in the field of PIBs.