Layered manganese-based oxides are promising candidates as cathode materials for sodium-ion batteries (SIBs) due to their low cost and high specific capacity. However, the Jahn-Teller distortion from high-spin Mn3+ induces detrimental lattice strain and severe structural degradation during sodiation and desodiation. Herein, lithium is introduced to partially substitute manganese ions to form distorted P'2-Na0.67Li0.05Mn0.95O2, which leads to restrained anisotropic change of Mn-O bond lengths and reinforced bond strength in the [MnO6] octahedra by mitigation of Jahn-Teller distortion and contraction of MnO2 layers. This ensures the structural stability during charge and discharge of P'2-Na0.67Li0.05Mn0.95O2 and Na+/vacancy disordering for facile Na+ diffusion in the Na layers with a low activation energy barrier of ∼0.53 eV. It exhibits a high specific capacity of 192.2 mA h g-1, good cycling stability (90.3% capacity retention after 100 cycles) and superior rate capability (118.5 mA h g-1 at 1.0 A g-1), as well as smooth charge/discharge profiles. This strategy is effective to tune the crystal structure of layered oxide cathodes for SIBs with high performance.