The surface of LiNi0.8Co0.15Al0.05O2 (NCA) cathode material is modified with different percentages of Y2O3 through a wet chemical-calcination method to improve its electrochemical performance for using in lithium-ion batteries. The XRD results show that surface modification does not change the crystalline structure of NCA. The x wt% Y2O3-decorated (0.05 ≤ x ≤ 2) samples exhibit improved cyclability and rate-capability compared to pristine NCA. SEM images along with elemental mapping of Y show the uniform coverage of the NCA particles surface with yttrium oxide. The 1 wt% Y2O3-decorated NCA electrode exhibited a specific capacity of 181 mAh g−1 after 50 cycles at 0.5C, while that was 134 mAh g−1 for the pristine one. These specific capacities are equivalent to capacities retention of 93% and 69% for optimized electrode and pristine one, respectively. The enhanced electrochemical performance of the optimized Y2O3-decorated NCA is due to the protective and conducting roles of yttrium oxide, which are clearly manifested in the results of electrochemical impedance spectrometry. Yttrium oxide, by the surface modification of the active material, diminishes the side reactions between NCA particles and the electrolyte. Besides, yttrium oxide increases the electrical conductivity of the electrode by establishing a good electrical connection with the active material.