There is large hysteresis between charge and discharge curves in lithium-rich layer-structured cathode material, Li1.2Ni0.13Mn0.54Co0.13O2. The mechanism for hysteresis was examined by X-ray diffraction (XRD) and X-ray absorption fine structure (XAFS) measurement as a first step in solving this issue. XRD measurements clarified that there was hysteresis in the lattice parameter between charge and discharge processes. XAFS spectra indicated that transition metals were oxidized and reduced in the same potential region during charge and discharge processes. Oxygen was oxidized at higher potential than transition metals during charge process; however, the former was reduced at lower potential than the latter during discharge process. Therefore, large hysteresis of potential between charge and discharge processes in Li1.2Ni0.13Mn0.54Co0.13O2 was mainly related to the reaction which is compensated with redox of oxygen.