We have studied the local structure of LiCoO(2) nanoparticles by Co K-edge x-ray absorption spectroscopy as a function of particle size. Extended x-ray absorption fine structure data reveal substantial changes in the near neighbor distances and the associated mean square relative displacements with decreasing particle size. X-ray absorption near edge structure spectra show clear local geometrical changes with decreasing particle size, similar to those that appear in the charging (delithiation) process. The results suggest that the LiCoO(2) nanoparticles are characterized by a large atomic disorder confined to the Co-O octahedra, similar to the distortions generated during the delithiation, and this disorder should be the primary limiting factor for a reversible diffusion of Li ions when nanoparticles of LiCoO(2) are used as cathode material in rechargeable Li ion batteries.