Due to well-known Jahn–Teller distortion in spinel LiMn1.5Ni0.5O4, it can only be reversibly electrochemically cycled between 3 and 4.8 V with a limited reversible capacity of ∼147 mAh g−1. This study intends to embed the layer-structured Li2MnO3 nanodomains into LiMn1.5Ni0.5O4 spinel matrix so that the Jahn–Teller distortion can be suppressed even when the average Mn oxidation state is below +3.5. A series of xLi2MnO3·(1 − x)LiMn1.5Ni0.5O4 where x = 0, 0.1, 0.2, 0.3, 0.4, 0.5 and 1 are synthesized by co-precipitation method. The composites with intermediate values of x = 0.1, 0.2, 0.3, 0.4 and 0.5 exhibit both spinel and layered structural domains in the particles and show greatly improved cycle stability than that of the pure spinel. Among them, 0.3Li2MnO3·0.7LiMn1.5Ni0.5O4 delivers the highest and almost constant capacity after a few conditional cycles and shows superior cycle stability. Ex-situ X-ray diffraction results indicate that no Jahn–Teller distortion occurs during the cycling of the 0.3Li2MnO3·0.7LiMn1.5Ni0.5O4 composite. Additionally, 0.3Li2MnO3·0.7LiMn1.5Ni0.5O4 possesses a high energy density of ∼700 Wh kg−1, showing great promise for advanced high energy density lithium-ion batteries.