Ultrathin film coatings on battery materials via atomic layer deposition (ALD) have been demonstrated as an efficient technology for battery performance enhancement. However, the fundamental understanding on lithium intercalation into active materials through the interface between the coating and active materials is unclear, which makes it difficult to optimize ALD coating strategies. Further, like most active materials, a coating layer can undergo volume change during the intercalation process, which can produce detrimental structural changes and mechanical failure of the layer. In this work, first-principles calculations are conducted to reveal the behavior of a coating layer on an active material particle by focusing on the intercalation energy variation, lithium-ion transport, electron chemical potential change, and structural changes of the coating layer. The analysis comprehensively explains an experimental observation that a CeO2 coating on LiMn2O4 particles exhibits better performance in capacity and cycling than an Al2O3 coating on the same particles. The fundamental knowledge imparted from this work provides an important understanding about the beneficial role of ALD coatings in lithium-ion battery performance and capacity retention.