LiCoO2 has α-NaFeO2 structure type and it has been reported that layered cation ordering is preserved during repeated insertion and removal of Li+. We have observed, at a nano-particle scale, cation disorder induced in LiCoO2 after prolonged cycling. LiCoO2 cathode powders with nano-grain sized of 70–300nm were synthesized by a mechano-chemical method. Transmission electron microscopy study of LiCoO2 showed that the initial O3 crystal structure partially transformed to a cubic spinel phase. This spinel phase formation may be responsible for capacity degradation after prolonged cycling of LiCoO2-based rechargeable lithium batteries. Cycle life of small size (70nm) LiCoO2 powder until 200 cycles is better than that of large size (300nm) LiCoO2 powder due to shorter diffusion distance.