Li(Ni, Mn)O-2 materials have recently shown promise as high capacity stable electrodes for advanced rechargeable lithium batteries. Using first principles quantum mechanical energy computations we demonstrate that the stability of these materials is due to the particular valence distribution on the transition metals in this material. Spin density calculations indicate that the Mn ion has oxidation state +4 independently of the Li content in the material, while Ni is oxidized from Ni2+ to Ni4+ upon removing Li. The high insertion voltage for the LiNi0.5Mn0.5O2 can be partly attributed to the change in Mn-Ni interaction upon Li cycling. (C) 2002 The Electrochemical Society.