Under realistic operation conditions of solid oxide fuel cells, CO2 and/or H2O in air can react with the cathode, and deteriorate its activity and stability. In this study, effects of CO2 and H2O on Ba0.3Co0.7Fe0.2Nb0.1O3-delta (BCFN) cathode have been studied by the analyses of X-ray diffraction patterns, electrical conductivity, and electrochemical impedance spectra. In simulated air with the co-existence of CO2 and H2O, BaCO3 is formed on the cathode surface at 600 degrees C, where BCFN is stable with either CO2 or H2O individually. In addition, BCFN performs lower electrical conductivity and higher polarization resistance (R-p) in air with CO2 and H2O. However, degradation of BCFN electrode is reversible:; of BCFN recovers when atmosphere is switched back to fresh air. Further, spray-drying method is proposed to fabricate Ce0.9Gd0.1O2-delta nano-particles coating on BCFN electrode, effectively improving the activity and stability of cathode against contamination of CO2 and H2O.