We introduce MorphNLI, a modular step-by-step approach to natural language inference (NLI). When classifying the premise-hypothesis pairs into entailment, contradiction, neutral, we use a language model to generate the necessary edits to incrementally transform (i.e., morph) the premise into the hypothesis. Then, using an off-the-shelf NLI model we track how the entailment progresses with these atomic changes, aggregating these intermediate labels into a final output. We demonstrate the advantages of our proposed method particularly in realistic cross-domain settings, where our method always outperforms strong baselines with improvements up to 12.6% (relative). Further, our proposed approach is explainable as the atomic edits can be used to understand the overall NLI label.