ABSTRACT Sustainable recycling of degraded LiCoO 2 (LCO) cathode is critical for minimizing the environmental footprint of lithium‐ion batteries. Herein, we propose an upcycling method that converts degraded LCO into high‐voltage cathodes by constructing a compositional and structural dual‐gradient structure, guided by the effective ionic potential (EIP, Φ* ), a descriptor for foreign dopant diffusivity in degraded LCO lattices. Specifically, low‐ Φ* dopants tend to exhibit high bulk diffusivity, whereas high‐ Φ* dopants are retained near the surface, which promotes the formation of the compositional gradient and leads to a structural transition in LCO from a fully disordered, dense surface to an ordered layered structure in the bulk. This structure endows the upcycled cathode with a stabilized surface and low‐strain bulk structure, enabling its superior electrochemical performance over the commercial counterpart at cut‐off potentials of 4.6 and 4.65 V. Comprehensive kinetic and thermodynamic analyses reveal the critical role of vacancies in spent LCO for this structural engineering: Bulk vacancies facilitate the formation of deeper dopant concentration gradients within particles, while vacancies near the surface promote the development of a continuous and dense surface disordered structure. Multiscale characterizations and theoretical calculations elucidate the relationship between the engineered structure and the electrochemical stability of the upcycled cathode.