Lithium nickel oxide nanoparticles were synthesized by induction thermal plasma. The forming mechanism of the nanoparticle crystal structure was investigated based on nucleation theory and thermodynamic considerations. Synthesized Li-Ni-oxide nanoparticles were nonstoichiometric Li0.4Ni1.6O2 (space group Fm3m) of the Li-deficient system. Stoichiometric LiNiO2 was difficult to synthesize because of its lower thermodynamic stability when compared with NiO in high-temperature region of more than 2248K. Reactions forming NiO were predominant at temperatures above 2248K. LiNiO2 forming reactions were unlikely to occur because Li2O was hard to condense onto NiO nuclei above 2248 K. Therefore, nonstoichiometric Li0.4Ni1.6O2 is easily generated. This was because Ni had a stable divalent valence and formed a strong bond with O. The Gibbs free-energy change suggested that the divalent Ni2+ (NiO) is more stable than trivalent Ni3+ (LiNiO2) at temperatures above 2248 K. This study investigated factors affecting the control of Li-Ni-oxide nanoparticles formed in thermal plasma.