Due to the safe magnesium anode and fast Li⁺ intercalation cathode, Mg-Li hybrid ion batteries (MLIBs) are considered to be one of the most promising candidates for electrical energy devices. However, developing cathode materials with good electrochemical properties is still a challenge for MLIBs. In this work, oxygen vacancy-rich Nb₂O₅ cathode material was synthesized by a simple annealing treatment at high temperature. The results indicate that abundant oxygen vacancies are generated and a mass of original Nb₂O₅ nanoparticles are formed on the surface of raw Nb₂O₅ after annealing treatment. Density functional theory (DFT) analysis indicates that the oxygen vacancies could improve the conductivity of Nb₂O₅. The oxygen vacancy-rich Nb₂O₅ delivers a high reversible capacity of 204.6 mA h g⁻¹ at a current of 50 mA g⁻¹, and a cycling stability with capacity retention of 58.1% at 50 mA g⁻¹ after 200 cycles, obviously higher than the oxygen vacancy-free Nb₂O₅ with capacity retention of 23.3%. The improved reversible capacity and cycling stability are mainly attributed to oxygen vacancies, increased conductivity, and newly formed Nb₂O₅ nanoparticles.