Li-rich layered oxides are of great importance as cathode materials for advanced lithium ion batteries. In this work, Li-rich layered Li(Li0.17Ni0.2Co0.05Mn0.58)O2 oxide is synthesized by a spray-drying method, and modified subsequently with CeO2 nanoparticles. It is demonstrated that the surface of the Li(Li0.17Ni0.2Co0.05Mn0.58)O2 oxide is modified with CeO2 nanocrystallites, which exist as isolated nano-particles or a thick CeO2 layer with increasing CeO2 content. After the surface modification with CeO2 nanoparticles, Li(Li0.17Ni0.2Co0.05Mn0.58)O2 oxide presents lower surface charge transfer resistance, larger discharge capacity and higher initial coulombic efficiency. In particular, the modified sample with 1wt % CeO2 shows the optimized cycle stability and high-rate discharge capability. In addition, the thermal stability of the cathode at delithiated state is improved to a certain extent by the surface modification with CeO2 nanoparticles, which is attributed to that the oxygen generated from the initial charge can be absorbed and stored in CeO2 nanoparticles on the surface of Li(Li0.17Ni0.2Co0.05Mn0.58)O2.