Stabilized lithium nickelate is receiving increased attention as a low-cost alternative to the LiCoO2 cathode now used in rechargeable lithium batteries. Layered LiNi1−x−y M x M y O2 samples (M x =Al3+ and M y =Mg2+, where x =0.05, 0.10 and y =0.02, 0.05) are prepared by the refluxing method using acetic acid at 750°C under an oxygen stream, and are subsequently subjected to powder X-ray diffraction analysis and coin-cell tests. The co-doped LiNi1−x−y Al x Mg y O2 samples show good structural stability and electrochemical performance. The LiNiAl0.05Mg0.05O2, cathode material exhibits a reversible capacity of 180mAhg−1 after extended cycling. These results suggest that the threshold concentration for aluminum and magnesium substitution is of the order of 5%. The co-substitution of magnesium and aluminium into lithium nickelate is considered to yield a promising cathode material.