Layered lithium transition metal (TM) oxides LiTMO₂ (TM = Ni, Co, Mn, Al, etc.) are the most promising cathode materials for lithium-ion batteries because of their high energy density, good rate capability and moderate cost. However, the safety issue arising from the intrinsic thermal instability of nickel-based cathode materials is still a critical challenge for further applications in electric vehicles and energy storage power stations. The main reasons include side reactions between the highly reactive Ni^3+/4+ and liquid electrolyte, oxygen release accompanied by structural phase transition, and internal microcrack propagation owing to the low strength of spherical secondary particles. Great efforts have been invested to modify nickel-based cathode materials such as stabilization of bulk structure by element doping, surface engineering, nanostructure design, and particle mono-crystallization. In this review, we summarize these advances and try to give an in-depth insight into the origin of the thermal instability of nickel-based cathode materials. More importantly, some effective strategies to improve thermal stability are outlined, expecting to accelerate the future development of layered TM oxides with high safety.