A high-energy functional cathode material with an average composition of Li[Ni0.72Co0.18Mn0.10]O2, mainly comprising a core material Li[Ni0.8Co0.2]O2 encapsulated completely within a stable manganese-rich concentration-gradient shell is successfully synthesized by a co-precipitation process. The Li[Ni0.72Co0.18Mn0.10]O2 with a concentration-gradient shell has a shell thickness of about 1 µm and an outer shell composition rich in manganese, Li[Ni0.55Co0.15Mn0.30]O2. The core material can deliver a very high capacity of over 200 mA h g−1, while the manganese-rich concentration-gradient shell improves the cycling and thermal stability of the material. These improvements are caused by a gradual and continuous increase of the stable tetravalent Mn in the concentration-gradient shell layer. The electrochemical and thermal properties of this cathode material are found to be far superior to those of the core Li[Ni0.8Co0.2]O2 material alone. Electron microscopy also reveals that the original crystal structure of this material remains intact after cycling.