LiNi0.6Co0.2Mn0.2O2 and Mg-substituted LiNi0.6Co0.2Mn0.2O2 cathode materials have been prepared by co-precipitation and high-temperature solid state method. The effects of partial substitution of Ni with Mg in LiNi0.6Co0.2Mn0.2O2 material on its chemical component, crystal structure, surface valence states, electrochemical properties, and Li+ diffusion barrier have been extensively studied. The Rietveld refinement results reveal that cation mixing has been suppressed effectively, and the lattice parameters a and c decrease while the c/a ratio increases induced by Mg doping. The X-ray photoelectron spectroscopy (XPS) indicates that Mg substitution reduces the relative ratio of Ni2+/Ni3+ ions on surface. Electrochemical studies indicate that the Mg-substituted material exhibits better cycling performance. First-principles calculations indicate that Mg doping increase the activation barriers of Li+ migration, thus excesses of Mg substitution lead to rate performance degradation.