LiNiO2 was prepared through two-step solid-state reaction by mechanochemical method and heat treatment, using LiOH (Li2CO3) and Ni(OH)2 as starting materials. The influence of grinding speed and time, heat treatment time, and starting materials on the structure of LiNiO2 was studied. The as-milled samples and products were characterized by scanning electron microscope (SEM) and X-ray diffraction (XRD). The results show that uniform as-milled samples can be obtained at grinding speed of 580 rpm for 0.5 h, using LiOH and Ni(OH)2 as raw materials. Perfect crystal LiNiO2 has been prepared by calcining the as-milled samples at 700 °C for 15 h. Composite material powders consisting of Li2Ni8O10 and LiNiO2 have been obtained using Li2CO3 as lithium source.