The fight was long over, but Shigaraki had a lot to say when he ran into Overhaul again. Why did Shigaraki decay Overhaul’s arms?
Shigaraki uses decay on Overhaul’s arms because of his stance on quirks. Overhaul says humans shouldn’t have quirks, so Shigaraki uses decay to remove Overhaul’s quirk. It’s meant to tease and demean Overhaul.
The League of Villains also successfully steals Overhaul’s quirk-destroying product during this time.
Shigaraki chooses to decay Overhaul’s arms
In chapter #160, Overhaul is being transported to a Villain-centric hospital. He is arrested after a tense battle against Deku, and he’s now being hauled off for questioning.
Shigaraki and the League of Villains intercept the hospital transport vehicle. The group wants to steal a product that Overhaul is holding on too which allows for quirk removal. It’s the same product that causes Mirio to become quirkless.
The group is able to successfully defend itself against Snatch, a Pro Hero who joins the hospital caravan. Once the transport vehicle is successfully crashed and flipped, Shigaraki approaches Overhaul.
He asks Shigaraki if the League of Villains came to get rid of him. Shigaraki says he thought of something much worse that better fits how “high and mighty” Overhaul likes to behave.
Shigaraki inspects the quirk-removal product, clarifying that one box is finished while the other remains a prototype.
“Listen, Overhaul,” Shigaraki says quietly. “A guy spouting off about getting rid of all quirks shouldn’t be relying on quirks, right?”
He then holds Overhaul’s wrist and uses the decay quirk. Shigaraki then slices Overhaul’s arm off, saving him from the decay reaching the rest of the body.
Shigaraki says that Overhaul is now a useless, helpless, quirkless wonder. He teases Overhaul, stating that all the hard work it took to acquire the product now belongs to the League of Villains.
So that’s the answer. Shigaraki uses decay on Overhaul’s arms because of Overhaul’s stance on quirks. He preaches that humans shouldn’t have quirks, so Shigaraki uses decay on his arms to remove his quirk.