The microstructure of LiNi0.8Co0.15Al0.05O2 positive electrode material before and after the first cycle was investigated by scanning transmission electron microscopy (STEM) and electron energy loss spectroscopy (EELS). STEM and EELS analysis shows that, before cycling, there are very thin layers of material at grain boundaries that contain a small amount of transition metal ions (particularly Ni) on Li sites. After the first cycle, the thickness of some grain boundary layers increases significantly, accompanied by formation of microcracks at grain boundaries. Also, from the grain interior to the grain boundary, the structure gradually changes from an ordered layer structure (alpha-NaFeO2-type) to a partially ordered structure and then to a disordered rock-salt structure. We posit that these microstructural changes are primarily responsible for the irreversible capacity during the first cycle. (C) 2011 The Electrochemical Society. [DOI: 10.1149/1.3544843]