Electronic structures of Mg-doped LiCoO2 were studied both experimentally via electron energy-loss spectroscopy (EELS) and theoretically via ab initio calculations based on density-functional theory. The Co L-2,L-3 edge and 0 K edge were employed to probe effects of Mg doping on the electronic structure of Co 3d and 0 2p states. According to the EELS results, Co tends to be a mixed-valence state, and 0 becomes more closed-shell characteristic with Mg doping. Quantum-mechanical calculations are performed using a total-energy pseudopotential code, CASTER Density of states and partial density of states are calculated, which are consistent with EELS spectra. Both experimental and theoretical evidence of the change in the valence state of both Co and 0 are revealed. A charge balance mechanism in Mg-doped LiCoO2 is suggested.