LiCoO2 is the most widely used and extensively studied cathode material for Li-ion batteries. The studies based on the improvement of the performance have focused on the structural and electrochemical properties of LiCoO2. However, significantly less attention has been paid to its magnetic properties and their effects on battery performance. For the first time to our knowledge, we report a thermally induced magnetic spin state transition from low spin (LS) to intermediate spin (IS) at ∼800K in bulk LiCoO2 via magnetic susceptibility measurements. We quench the LiCoO2 from above the spin state transition temperature (∼810K) into liquid nitrogen to preserve the IS state at room temperature. We use this quenched sample (q-LiCoO2) as an active cathode material. We observe a significant improvement (∼15% better capacity retention after 200 cycles at 1C) in cell performance of q-LiCoO2 compared to the ref-LiCoO2 which is used as a reference material. Our results show that it is possible to tailor the magnetic properties and electronic structure of cathode materials to achieve better battery performance.