As one of the tip-based top-down nanoscale machining methods, atomic force microscopy (AFM) electric lithography is capable of directly generating flexible nanostructures on conductive or semi-conductive sample surfaces. In this work, distinct fabrication mechanisms and mechanism transition from local anodic oxidation (LAO) to electrical breakdown (BD) in the AFM nanoscale electric lithography of the highly oriented pyrolytic graphite sample surface was studied. We provide direct evidence of the transition process mechanism through the detected current–voltage (I–V) curve. Characteristics of the fabrication results under the LAO, transition, and BD regions involving the oxide growth rate or material removal rate and AFM probe wear are analyzed in detail. These factors are of great significance for improving the machining controllability and expanding its potential applications.