Nano-crystalline LiFeO2 has been synthesized at low temperature (150°C) using the solid-state method. It was composed of orthorhombic LiFeO2 and a small amount of spinel LiFe5O8 phases. A Li/LiFeO2 cell showed not only a fairly high initial discharge capacity of over 150mAh/g, but also a good cycle retention rate at room temperature. We first found that the orthorhombic LiFeO2 underwent a structural change to the spinel phase (LiFe5O8) during the charge/discharge process, which resulted in the capacity decline of the Li/LiFeO2 system.