LiNi0.8Co0.2O2 cathode material showed a performance loss after storage in air. The surface species on the material formed during the exposure to air were identified through TG, SEM, TPD-MS, XRD and XPS. Two thin layers were found on the surface. The first layer in contact with the bulk material contains NiO-like species, and the top layer consists of adsorbed hydroxyl, bicarbonate, carbonate, and crystalline Li2CO3. These two layers are both electrochemically inactive and poor conductors for Li+ ions, which are believed to be responsible for the storage loss. A chemical reaction mechanism, involving atmospheric H2O and CO2, and the particle surface of LiNi0.8Co0.2O2 material, was proposed to explain the formation process of those surface species. For storage loss prevention, a doping approach to reduce nickel content and a storage approach to isolate the material from H2O and CO2 were found to be effective to improve the storage property of LiNiO2-based materials. For storage loss recovery, a heat-treatment process at 725°C was demonstrated to be a feasible approach for full recovery of the performance.