High-voltage medium-nickel low-cobalt lithium layered oxide materials have been recognized as a kind of promising cathodes to further promote the energy density of lithium-ion batteries (LIBs) due to their relatively high capacity, low cost, and improved safety. However, the high voltage induced bulk structure degradation and interfacial environment deterioration limit the performance liberation of this kind of cathodes. Here, an ultrathin and uniform Sm₂O₃ rare earth oxide functional coating has been introduced to enhance the lithium storage performance of LiNi_0.6Co_0.05Mn_0.35O₂ (NCM) cathode. On the one hand, this multi-electron Sm₂O₃ function coating could increase the activation energy of surface lattice oxygen loss, improving the electrode–electrolyte interface stability; on the other hand, it delays the phase transition temperature and weakens the harmful H3 phase transition of NCM, improving its thermal stability as well as minimizing the mechanical degradation. These beneficial effects endowed by the Sm₂O₃ coating imply that it could behave as both a physical passivation layer and a charge compensation payer. As a result, the 2%-Sm₂O₃@NCM delivers a higher capacity retention rate (97.3% vs 75.0% after 150 cycles) and a superior rate capacity (117 mAh g⁻¹ vs 52 mAh g⁻¹ at 5C) than the pristine NCM, making high-voltage lithium layered oxide one step closer to being a viable cathode.