Co-substituted α-Ni(OH)2 was synthesized by a novel microwave homogeneous precipitation method in the presence of urea. LiNi0.8Co0.2O2 cathode material was synthesized by calcining Co-substituted α-Ni(OH)2 precursor and LiOH·H2O at 900℃ for 10 h in flowing oxygen. XRD, FTIR, FESEM and electro- chemical tests were used to study the physical and the electrochemical performances of the materials. The results show that the prepared LiNi0.8Co0.2O2 compound has a good layered hexagonal structure. Moreover, the LiNi0.8Co0.2O2 cathode material demonstrates stable cyclability with a high initial specific discharge capacity of 183.9 mAh/g. The good electrochemical performance could be attributed to the uniform distribution of Ni2+ and Co2+ ions in the crystal structure and a minimal cation mixing in LiNi0.8Co0.2O2 host structure.