Electrochemical, X-ray diffraction, and K and L edge X-ray absorption data are reported for the layered cathode material Li1.2Mn0.4Cr0.4O2. The structural data show that this material can be understood as a solid solution of the layered phases Li2MnO3 and LiCrO2, comprising tretravalent Mn and trivalent Cr, with approximately 0.2 lithium incorporated in the transition metal layers. According to the analysis of the K edge extended X-ray absorption fine structure, lithium ions in the transition metal layers are clustered around Mn ions. L edge X-ray absorption near edge spectra show that in the first charge-discharge cycle chromium is the electrochemically active species, cycling between Cr3+ and Cr6+. Manganese remains as Mn4+ throughout charge and discharge.