Fe2O3 nanoparticles are employed as a coating material to optimize the electrochemical performance of LiCoO2 at high voltage. When the current rate is 1 C with the cutoff potential at 4.5 V, the 5 wt.% Fe2O3-coated LiCoO2 delivers an initial capacity of 168.7 mAh g−1. More importantly, its capacity retention after 50 cycles reaches up to 92.6%, whereas the value for pristine LiCoO2 is only 58.5%. The electrochemistry impedance spectroscopy analysis demonstrates that Fe2O3 coating plays an important role in decreasing the charge transfer resistance of cell. Compared with the performance of the Fe2O3-mixed and Fe-doped LiCoO2 samples, it is found that the role of Fe2O3 coating is unique, which may change the characteristic of the surface of LiCoO2 particles. This technique may provide an effective and convenient way for optimizing other electrode materials.