LiCoO2 (LCO) has been functionally modified with electronic conductive Al-doped ZnO (AZO) via a sol-gel method. The physicochemical characterization results demonstrate that the AZO layer is coated onto the surface of LiCoO2 particles successfully, and the AZO-coated LCO material shows a higher electronic conductivity than pristine sample. The LCO sample coated by 2wt.% AZO shows the excellent cyclability with a capacity retention of 98.2% after 50 cycles in the voltage range of 2.75–4.5V under room temperature. More importantly, this material exhibits outstanding rate capability and delivers a quite high capacity of 156mAhg−1 at the rate of 8C (1600mAg−1), corresponding to 86.6% of the capacity at the rate of 0.1C. Such superior electrochemical performance results from the effective coating of AZO layer which not only acts as a physical protection layer to stabilize the surface structure, but also supplies the conductive networks to decrease charge transfer impedance. The conducting functionalized AZO coating is a facile and efficient approach to improve the electrochemical performance of LCO at a high cut-off voltage of 4.5V vs. Li+/Li for large-scale application of high energy density lithium ion batteries.