The metal-insulator transition of NbO2 is thought to be important for the functioning of recent niobium oxide-based memristor devices, and is often described as a Mott transition in these contexts. However, the actual transition mechanism remains unclear, as current devices actually employ electroformed NbOx that may be inherently different to crystalline NbO2. We report on our synchrotron x-ray spectroscopy and density-functional-theory study of crystalline, epitaxial NbO2 thin films grown by pulsed laser deposition and molecular beam epitaxy across the metal-insulator transition at ∼810°C. The observed spectral changes reveal a second-order Peierls transition driven by a weakening of Nb dimerization without significant electron correlations, further supported by our density-functional-theory modeling. Our findings indicate that employing crystalline NbO2 as an active layer in memristor devices may facilitate analog control of the resistivity, whereby Joule-heating can modulate Nb-Nb dimer distance and consequently control the opening of a pseudogap.