Partial substitution of Co with Fe in LiNi0.8Co0.15Al0.05O2 is carried out via ball-milling followed by a two-step solid reaction. The LiNi0.8Co0.15-yFeyAl0.05O2 (0 <= y <= 0.15) samples exhibit significantly improved cyclic stability compared to pristine LiNi0.8Co0.15Al0.05O2, although the specific capacity decreases with increasing of the Fe content. In particular, the LiNi0.8Co0.075Fe0.075Al0.05O2 material exhibits high capacity retention of 88.4% at 1 C after 350 cycles, relative to that of 55.7% for the pristine LiNi0.8Co0.15Al0.05O2. This phenomenon is more obvious at high rate and elevated temperature. The electrochemical impedance spectra and X-ray photoelectron spectra analysis demonstrate that less solid electrolyte interface film is formed on LiNi0.8Co0.075Fe0.075Al0.05O2 than LiNi0.8Co0.15Al0.05O2. The significantly improved cyclability is mainly attributed to the effect of the FeO6 octahedron on the edge-shared NiO6 octahedra via enhanced electron localization. As a result, the tendency to generate reactive oxygen species at the interface could be reduced, leading to suppression of the oxidation of the electrolyte.