Cobalt‐free, lithium‐rich composites are interesting cathodes for generation 3b Li‐ion batteries due to their high discharge capacity and improved sustainability with respect to state‐of‐the‐art NMC oxides, which are commonly doped with magnesium to stabilize their layered structure. In this article, the role of the magnesium dopant, including its solubility, chemical distribution, and phase evolution, has been characterized and optimized in the context of nanoscale composites. By combining XRD, XPS, TEM–EDX, and coin cell testing, a physically and chemically segregated model for Li 1.21‐2 x Mg x Ni 0.16 Mn 0.62 O 2 ( x = 0, 0.01, 0.03, 0.05, and 0.1) as a function of Mg dopant level is presented, assuming an ionic doping compensation mechanism. The best‐performing cathode, i.e., Li 1.20 Mg 0.01 Ni 0.16 Mn 0.62 O 2 , displays a homogeneous distribution of magnesium at the bulk particle level with an incipient phase‐segregated Ni‐rich structure at the particle edge, resulting in a discharge capacity of 187 mAhg −1 at 0.2C and an enhanced performance compared to undoped and x ≥ 0.03 samples. The structural and chemical results presented herein highlight the complex engineering required to achieve a specific phase structure and chemical (dopant) distribution of Li‐rich nanoscale composites.