Epitaxial La1.2Sr1.8Mn2O7 films with n=2 Ruddlesden–Popper structure were grown on SrTiO3
001 substrates. Decomposition through water intercalation led to the disappearance of the
metal-insulator transition in samples exposed to ambient atmosphere. Crystal damage was limited to
the surface layer only, demonstrating the anisotropic nature of the water intercalation process. By protecting films with a SrTiO3 capping layer, the metal-insulator transition persisted down to 2.5 unit cell thick films. In thinner films, we propose a mechanism related to the loss of interlayer ferromagnetic order in favor of in-plane antiferromagnetism as a reason for the loss of the metallic state.