Li-ion conductivity is one of the essential properties that influences the performance of cathode materials for Li-ion batteries. Here, using density functional theory, we investigate the polaron stability and its effect on the Li-ion diffusion in layered LiCoO2 with various magnetic orderings. We show that the local magnetism promotes the localized Co4+ polaron with the Li-diffusion barrier of ∼0.34 eV. While the Li-ion diffuses, the polaron migrates in the opposite direction to the Li movement. In the non-magnetic structure, on the other hand, the polaron does not form, and the Li diffusion barrier is lowered to 0.21 eV. Although the presence of the polaron raises the diffusion barrier, the magnetically ordered structures are energetically more stable during the migration than the non-magnetic case. Thus, our work advocates the hole polaron migration scenario for Li-ion diffusion. We further demonstrate that the strong electron correlation of Co ions plays an essential role in stabilizing the Co4+ polaron.