The intercalation and de-intercalation behavior of lithium in graphite was investigated with respect to the formation of lithium graphite intercalation compounds (Li-GICs) using a combination of XRD measurements and metallography. Microstructural features and the evolution of phases and structural details of Li-GICs during Li uptake and release are correlated for the first time, giving new insight into the formation of Li-GICs. Lithium evaporation loss during annealing was exploited for studying the phase evolution during lithium de-intercalation, whereas phase formation during lithium uptake was studied in a sample exhibiting a lithium concentration gradient. The experiments indicate that growth and dissolution of the compound LiC6 do not occur by an inverse mechanism, as shown by the formation of different intermediate phases. The compound LiC12 was found to be a non-stoichiometric solid solution. LiC6 can be clearly identified in micrographs by the color and distinct phase boundaries, while LiC12 is situated in the vicinity of the LiC6 phase with varying coloration depending on the Li content.