The electrochemical performance of Li-rich layered manganese oxide (LMO) cathodes is greatly affected by oxygen release and irreversible transition metal (TM) migration. Such structural instabilities are the driving force behind structural reconstruction, rapid voltage decay, and capacity fade in LMR cathodes due to the inability to retain a layered-layered phase during cycling hence the inability to maintain a consistent conductive ion flow (lithiums). Herein, we report for the first time exploration of manganese and oxygen-compensated nanostructures to investigate its role in the structural morphology and microstructure. The nanostructures were studied using the molecular dynamics simulation method owing to its ability to simulate nucleation and crystal growth. According to the analysis, the simulated nanospheres yielded multi-grained and single crystalline phases for Mn and O compensation, respectively. Further analysis illustrated severe Li/O loss in the structure when the role of oxygen is neglected. Moreover, the formation of layered-layered-spinel composites is demonstrated together with the comparison of temperature-dependent diffusion coefficients. This goes to show that both oxygen and manganese play a crucial role during the cycling process of Li-rich cathode materials. These findings can provide important insights into understanding diffusion and ageing mechanisms in cathode materials during the cycling processes