The first-cycle irreversibility of Li1.048(Ni1/3Co1/3Mn1/3)0.952O2 (LiMO2) cathode material in lithium and lithium-ion cells has been studied using galvanostatic cycling and in situ synchrotron X-ray diffraction. The so-called “lost capacity” of a Li/LiMO2 cell observed during initial cycle in conventional voltage ranges (e.g., 3.0–4.3 V) could be completely recovered by discharging the cell to low voltages (<2V). During the deep discharge, the lithium cell exhibited an additional voltage plateau, which is believed to result from the formation of Li2MO2-like phase on the oxide particle surface due to very sluggish lithium diffusion in Li1−Δ MO2 with Δ →0 (i.e., near the end of discharge). Voltage relaxation curve and in situ X-ray diffraction patterns, measured during relaxation of the lithium cell after deep discharge to obtain 100% cycle efficiency, suggested that the oxide cathode returned to its original state after the following two-step relaxation processes: relatively quick disappearance of the Li2MO2-like phase on the particle surface, followed by slow lithium diffusion in the layered structure. Experiments conducted in Li4Ti5O12/LiMO2 lithium-ion cells confirmed that the physical loss of lithium (via surface film formation or parasitic electrochemical reactions, etc.) from LiMO2 was negligible up to an oxide voltage of 4.3V vs. Li+/Li.