Silicon suboxide is currently considered as a unique candidate for lithium ion batteries anode materials due to its considerable capacity. However, no adequate information exists about the role of oxygen content on its performance. To this aim, we used density functional theory to create silicon suboxide matrices of various Si:O ratios and investigated the role of oxygen content on the structural, dynamic, electronic properties and lithiation behavior of the matrices. Our study demonstrates that the O atoms interact strongly with the inserted Li atoms resulting in a disintegration of the host matrix. We found that higher concentration of oxygen atoms in the mixture reduces its relative expansion upon lithiation, which is a desirable quality for anode materials. It helps in preventing crack formation and pulverization due to large fluctuations in volume. Our study also demonstrates that a higher oxygen content increases the lithium storage capacity of the anode. However, it can also cause the formation of stable complexes like lithium silicates that might result into reversible capacity loss as indicated by the voltage–composition curves. The study provides valuable insights into the role of oxygen in moderating the interaction of lithium in silicon suboxide mixture in microscopic details.