The thermal stability of the layered oxide LiNi1/3Mn1/3Co1/3O2 and its delithiated product is studied by a combination of X-ray and electron diffraction, TEM imaging and magnetic measurements. Diffraction shows that a small fraction of the layered material converts to spinel phase following delithiation. More spinel phase is observed after thermal annealing. The morphology of the particle changes upon thermal annealing of delithiated materials. The selected area electron diffraction and the magnetic measurement results confirm the presence of Ni+2/Li+ disorder in the delithiated material, which increases upon thermal ageing. The oxidation states of the transition metal ions were determined from magnetic data. It is shown that the charge balance due to removal of Li+ is maintained through oxidation of Ni+2 and that the oxidation states remain stable during subsequent annealing. No antiferromagnetic ordering or crystallographic in plane ordering of transition metal ions is observed. These results clearly describe the thermal degradation of Li x Ni1/3Mn1/3Co1/3O2 (x ≤ 1) occur through the significant microstructural changes.