Nano-crystalline LiNi1−x Mg x O2 cathode material is synthesized via a novel, simple, solid-state reaction. Thermal analysis studies (TG/DTA) show the formation of crystalline oxides at 600°C. The influence of Mg addition on the electrochemical behaviour of LiNiO2 is discussed. The morphology, nature, size and the shape of the synthesized materials are characterized by transmission electron microscopy (TEM) and scanning electron microscopy (SEM). LiNi0.8Mg0.2O2 nanoparticles with a size of 40nm and a uniform distribution and reduced aggregation are observed. Energy dispersive X-ray spectroscopic analysis shows the presence of magnesium in the compounds with an appropriate prepared concentration. The phase and structural characteristics of the LiNiO2 doped and undoped with Mg are revealed by X-ray diffraction spectroscopy (XRD). The addition of Mg does not alter the layered structure of the lithium nickelate. The addition of Mg in the cathode material does not affect the local ion environment, as investigated by FT-IR studies. The electrochemical properties are investigated by cyclic voltammetry (CV) and charge–discharge studies. Stable charge–discharge features have been observed for graphite/LiNi0.8Mg0.2O2 cells cycled in the potential range from 3.0 to 4.5V and the capacity retention is significantly improved at x =0.2 in LiNi1−x Mg x O2.