Li rechargeable cells made with structural the arrangement Li/membrane/Li x V2O5 were examined under different charge states using AC impedance, environmental scanning electron microscope (ESEM) and transmission electron microscope (TEM). These states include charged, discharged, and over-cycled. The lowest internal resistance was obtained from the cell in the charged state; the resistance increased when the cell was discharged; and the highest resistance was obtained from the cell in the over-cycled state. From the ESEM and TEM studies, it was found that the surface of the cathode was porous initially; however, it was coated with an amorphous film and porous features had also disappeared from the cell in the over-cycled state. In addition, higher concentration of aluminum was found on the surface of the cathode in over-cycled cells. The mechanisms for capacity degradation are discussed.