Lithium manganate spinel is extensively studied as a positive electrode in lithium ion rechargeable batteries. Growth of nano-size cathode particles is proposed to improve the rate capabilities of these cathode materials. It remains controversial if the particle size in the nano-range (as compared to the conventional micrometer size particles of these materials) has any appreciable influence on the discharge capacity, rate capabilities, and cycleability of these materials. In the 4V range, especially at slightly elevated temperature, lithium manganate exhibits capacity fading though the underlying mechanism for such fading is not yet clear. In the present work, we have successfully prepared nano-crystalline lithium manganate spinel powder by an acetate base solution route. Though the discharge capacity of these nano-crystalline cathodes was equivalent to their microcrystalline counterpart, these exhibited capacity fading in the 4V range. Through a combined X-ray diffraction, micro-Raman spectroscopy, and X-ray photoelectron spectroscopy (XPS) analyses, we correlated the observed capacity fading with the onset of Jahn–Teller (J–T) distortion toward the end of the discharge in the cut-off limit between 4.2 and 3.4V. It was postulated that if J–T distortion is the dominant fading mechanism of these nano-crystalline cathodes then by increasing the average oxidation state of the Mn ions in a virgin lithium manganate cathode, the onset of such distortion towards the end of the discharge could be delayed, and therefore, the cycleability of these cathodes could be improved. By synthesizing lithium and aluminum ion co-doped lithium manganate particles, we could increase the average oxidation state of the Mn ions in the virgin electrodes. Indeed, the cycleability of these co-doped cathodes was dramatically improved which supports our postulation. The doping contents of lithium and aluminum, however, should be further optimized to further increase the discharge capacity of these modified cathodes.