A surface modification strategy through soaking in Na2S2O8 aqueous solution and then annealing has been developed for Li-rich layered cathode materials for Li-ion batteries. The modified materials have a significant improvement on electrochemical performances. The initial discharge capacity increases from 257 to 285 mAh g−1, and the initial coulombic efficiency increases from 85.4% to 93.2% in the voltage rang of 2.0–4.6 V. The electrochemical enhancement mechanism has been revealed by detailed investigations on the surface structural conversion of the material. X-ray photoelectron spectroscopy (XPS) and inductively coupled plasma-atomic emission spectrometry (ICP) confirm that Na2S2O8 oxidizes lattice oxygen to formal O2 2− species and the corresponding Li+ is extracted from the material surface. On the subsequent annealing, the formal O2 2− species turn to O2 and release from the particle surface. The increased oxygen vacancies induce structural rearrangement and lead to the phase transition from layered (R-3m or C2/m) to spinel (Fd3m) at the particle surface, which is supported by X-Ray Diffraction (XRD) and high resolution transmission electron microscope (HRTEM). It is also found that the spinel phase increases with the increasing annealing temperature, and an internal structural evolution from LiM2O4-type spinel to M3O4-type spinel takes place at the same time.