We show the occurrence of local cation ordering in Li-ion battery material Li<sub>1.25</sub>Nb<sub>0.25</sub>Mn<sub>0.5</sub>O<sub>2</sub>, previously thought to be disordered. We deduce this ordering from X-ray diffraction, and test it against neutron diffraction & PDF, magnetic susceptibility and solid state NMR evidence. We identify the nature of the ordering as having a local structure related to that of gamma-LiFeO<sub>2</sub>, determine the correlation length of such ordering, and demonstrate its significant consequences for the material's electrochemistry.