Unencapsulated, exfoliated black phosphorus (BP) flakes are found to chemically degrade upon exposure to ambient conditions. Atomic force microscopy, electrostatic force microscopy, transmission electron microscopy, X-ray photoelectron spectroscopy, and Fourier transform infrared spectroscopy are employed to characterize the structure and chemistry of the degradation process, suggesting that O2 saturated H2O irreversibly reacts with BP to form oxidized phosphorus species. This interpretation is further supported by the observation that BP degradation occurs more rapidly on hydrophobic octadecyltrichlorosilane self-assembled monolayers and on H-Si(111), versus hydrophilic SiO2. For unencapsulated BP field-effect transistors, the ambient degradation causes large increases in threshold voltage after 6 hours in ambient, followed by a ~10^3 decrease in FET current on/off ratio and mobility after 48 hours. Atomic layer deposited AlOx overlayers effectively suppress ambient degradation, allowing encapsulated BP FETs to maintain high on/off ratios of ~10^3 and mobilities of ~100 cm2/(V*s) for over two weeks in ambient. This work shows that the ambient degradation of BP can be managed effectively when the flakes are sufficiently passivated. In turn, our strategy for enhancing BP environmental stability will accelerate efforts to implement BP in electronic and optoelectronic applications.