A method of monitoring the performance of the cell components was developed to study the cycling behavior of the commercial size rechargeable lithium-ion cells. A lithium reference electrode was placed into the center of a full commercial cylindrical cell in an effort to monitor the electrochemical behavior of the cell and its component electrodes during cycling. This technique allowed the resolution of measured voltage into component cathode and anode voltages and hence the resolution of the total area-specific impedance (ASI) into cathode and anode ASI. The cathode was found to be the electrode limiting the power and capacity of the Li-ion cell. Further investigations also revealed that the increase in the cathode ASI is a main cause of power and energy degradation of the cell during cycling.