Dielectric properties and charge compensation of Li and Co co-doped NiO (LCNO) ceramics prepared by a simple sol–gel route have been investigated. The concentration of Co makes a great influence on microstructure, dielectric properties and charge compensation mechanism of the LCNO ceramics. Grain size of the ceramics increases from 5.6 μm to 7.2 μm with dependence on Co concentration. By using a complex impedance analysis at different temperatures, the samples exhibit an electrically heterogeneous structure, which is responsible for a giant dielectric permittivity. The relationship between the activation energies of dielectric relaxation and conduction and charge compensation mechanism in this system were discussed.