Aqueous lithium‐ion batteries offer promising advantages such as low cost, enhanced safety, high rate capability, and the ability to deliver considerable capacity at 1.8 V, making them ideal candidates for large‐scale reserve power sources for renewable energy. However, the practical application of aqueous lithium‐ion batteries has been hindered by the poor cycle stability of layered cathode materials, including LiCoO2, in neutral aqueous electrolytes. This review examines the working principles, material limitations, and research progress of aqueous lithium‐ion batteries. The types and characteristics of materials used in the cathode of aqueous lithium‐ion batteries are summarized, with a primary focus on the attenuation mechanisms of LiCoO2 when used as the cathode material in aqueous electrolytes. Furthermore, this review explores the advancements in utilizing LiCoO2 in the cathode of aqueous lithium‐ion batteries, as well as the combination with machine learning. By addressing these critical aspects, this review aims to provide a comprehensive understanding of aqueous lithium‐ion batteries and shed light on future development and application prospects.