Solid-state transformation is often accompanied by mechanical expansion/compression, due to their volume change and structural evolution at interfaces at the atomic scale. However, these two types of dynamics are usually difficult to monitor in the same time. In this work, we use in-situ transmission electron microscopy to directly study the reduction transformation at the AgCl-Ag interface. Three stages of lattice fluctuations were identified and correlated to the structural evolution. During the steady state, a quasi-layered growth mode of Ag in both vertical and lateral directions were observed due to the confinement of AgCl lattices. The development of planar defects and depletion of AgCl are respectively associated with lattice compression and relaxation. Topography and structure of decomposing AgCl was further monitored by in-situ scanning transmission electron microscopy. Silver species are suggested to originate from both the surface and the interior of AgCl, and be transported to the interface. Such mass transport may have enabled the steady state and lattice compression in this volume-shrinking transformation.