The O2-type layered oxide cathode materials have attracted strong research interest recently because of their high specific capacity and their unique lattice structure that may help suppress the detrimental layer-to-spinel phase transition. These materials are metastable and commonly prepared through Li-Na exchange methods from the Na-containing P2-type oxides. Here we investigated the structural, chemical, and morphological changes during the ion-exchange processes in both the LiBr/hexanol solution and the LiNO₃/LiCl molten salts. The solution method was more favorable in preparing high-capacity O2-type cathode materials, even though the structural reorganization was slower compared with the molten-salt method. The as-made O2-type cathode materials, contrary to the previous belief, were actually Li-deficient at their pristine states, but could accept more Li ions than that it was extracted during the first charge/discharge cycle. The O2-type cathode materials exhibited high capacities (up to 266 mAh g⁻¹) but the cycle performance requires further improvements. XRD and Raman spectroscopy studies indicated that the structural changes in the bulk were quite reversible. Using a fluorinated electrolyte to address the interface instability improved the cycle performance. Our results provide a more complete understanding of the O2-type cathode materials and useful guidance in the design of low-cost, high-energy cathode materials for LIBs.