Metal-oxygen batteries, especially Li-oxygen batteries (LOBs), have attracted tremendous research attentions in the past decades. It is necessary to design novel cost-effective catalysts in the development of high performance rechargeable LOBs. Herein, we prepare the atom-layered two-dimensional (2D) β-Co(OH)2 nanosheets (AL-β-Co(OH)2) via phase transition of layered α-Co(OH)2 nanosheets (α-Co(OH)2) in a mild wet chemical process. The thickness of AL-β-Co(OH)2 is less than 1.5 nm. It is the first time of using atom-layered β-Co(OH)2 in the system of LOBs and this material shows outstanding catalytic performance. The AL-β-Co(OH)2 nanosheets as electrocatalysts in LOBs can better reduce the over-potential, enhance the specific capacity and improve cycling capability. It demonstrates a high initial capacity 11841 mAh g−1 at a current density of 100 mA g−1. It displays long cycle stability more than 70 cycles with a capacity restriction of 1000 mAh g−1. These results suggest that this strategy for designing oxygen reduction reaction (ORR) and oxygen evolution reaction (OER) catalysts via exfoliation of materials to atom-layered level could be a promising way to improve the performance of LOBs.