Abstract The demand for high‐performance and cost‐effective lithium‐ion batteries (LIBs) calls for cathodes with high energy density, structural stability, and reduced reliance on costly Co and Ni. Here, a Co‐free and Ni‐minimized (≤10 mol%) Li‐ and Mn‐rich layered oxide cathode is presented, Li 1.2 Mg 0.1 Ni 0.1 Mn 0.6 O 2 , engineered to balance performance and cost. Low‐cost Mg 2+ substitution can stabilizes the lattice and mitigates voltage decay. However, together with Ni minimization, it suppresses the initial oxygen redox, lowering first‐cycle capacity and energy density. Importantly, high‐voltage activation during the initial cycle successfully triggers the latent oxygen redox, and remarkably, enables full capacity recovery in subsequent cycles. This pre‐activation not only restores performance but also mitigates voltage decay and structural degradation over prolonged cycling. The Li 1.2 Mg 0.1 Ni 0.1 Mn 0.6 O 2 delivers a discharge capacity of ≈276.6 mAh g −1 and an energy density of ≈902.2 Wh kg −1 , with ≈93.4% capacity retention after 100 cycles. Operando X‐ray diffraction reveals a minimal c ‐axis variation (≈0.13%) and provides evidence of suppressed structural disorder following pre‐activation. Supported by electrochemical measurements, structural analysis, and first‐principles calculations, these findings unlock a pathway toward cost‐effective, high‐energy layered cathodes with stable cycling performance for next‐generation LIBs.