The spherical LiNi0.5Mn1.5O4 cathode material synthesized by a co-precipitation method has been modified by Fe2O3 through a simple chemical precipitation method. The effects of Fe2O3 coating on the structure and property of LiNi0.5Mn1.5O4 cathode have been carefully investigated using X-ray diffraction (XRD), scanning electron microscopy (SEM), transmission electron microscopy (TEM), energy dispersive X-ray spectroscopy (EDX) and atomic absorption spectroscopy (AAS). The results show that the Fe2O3 coating layer covered the surfaces of the spherical LiNi0.5Mn1.5O4 particles does not change the crystallographic structure of LiNi0.5Mn1.5O4, but it can protect the surface of the active materials from electrolyte erosion and suppresses the dissolution of transition metal elements. The effects of Fe2O3 coating layer on the electrochemical performances of LiNi0.5Mn1.5O4 have also been investigated systematically by the charge-discharge testing and AC impedance spectroscopy. Compared with the pristine LiNi0.5Mn1.5O4, the Fe2O3 modified material exhibits remarkably enhanced cyclic stability and excellent rate capability. In addition, surface modification of the LiNi0.5Mn1.5O4 is found to be an effective route for suppressing the increase of the impedance during the storage process at elevated temperatures.