Nano-crystalline NiFe2O4 particles were synthesized and used as active electrode material for a lithium ion battery that showed a high discharge capacity of 1534 mAh g−1 and charge capacity of 1170 mAh g−1 during the 1st cycle. X-ray absorption spectroscopy including XANES and EXAFS were used to investigate electronic and local structural changes of NiFe2O4 during the 1st lithiation and de-lithiation process. As lithium is inserted into the structure, tetrahedral site Fe3+ ions are reduced to Fe2+ and moved from tetrahedral sites to empty octahedral sites, while Ni2+ ions are unaffected. As a consequence, the matrix spinel structure collapses and transforms to an intermediate rock-salt monoxide phase. Meanwhile, the inserted Li is partially consumed by the formation of SEI and other side reactions during the conversion reaction. With further lithiation, the monoxide phase is reduced to highly disordered metallic Fe/Ni nanoparticles with a number of nearest neighbors of 6.0(8) and 8.1(4) for Fe and Ni, respectively. During subsequent de-lithiation, the metal particles are individually re-oxidized to Fe2O3 and NiO phases instead to the original NiFe2O4 spinel phase.