The preparation of solid solutions of the LiAlO2-LiCoO2 system in the complete composition range is described. Powder X-ray diffraction gives direct information about the partial substitution of Co by Al atoms, together with a fractional occupancy of tetracoordinated sites by aluminum atoms. EPR of impurity Ni3+ ions and Li-6 and Al-27 MAS NMR spectroscopies are used to assess for cation distribution. Li-6 NMR spectra show a single resonance of lithium ions in octahedral sites. Al-27 NMR spectra show that the distribution of Al atoms in tetrahedral and octahedral sites changes with composition. EPR spectra evidence that Ni3+ impurity ions in the AlyCo1-yO2 layers prefer mainly Al3+ ions as first neighbors. The potential applicability of these materials as intercalation electrodes is also evaluated in lithium anode cells. A poor lithium ion diffusivity, resulting from the presence of aluminum in both tetrahedral and octahedral sites, may limit the applicability of LiAlyCo1-yO2 cathodes. The partial substitution of Co by Ni leads to an improvement of the electrochemical performance.