Co3O4 nanostructures have attracted tremendous attention as anode materials for lithium ion batteries (LIBs) recently. However, their electrochemical processes and fundamental mechanism remain unclear. In this paper, we report the direct observation of the dynamic behaviors and the conversion mechanism of porous Co3O4 nanoplates/graphene in LIBs by in situ transmission electron microscopy (TEM). The microstructures of the lithiated/delithiated electrode are analyzed by electron diffraction and electron energy-loss spectroscopy. It is revealed that well-crystalline Co3O4 transform into many Co nanograins embedded in Li2O matrix during the first lithiation. The subsequent electrochemical charge–discharge processes are found to be a reversible phase transition between Co nanograins and CoO nanograins, which is different from the previously recognized mechanism (namely a reversible conversion between Co and Co3O4). Pores within the Co3O4 nanoplates can accommodate the volume expansion, and benefit for the stability of electrode and thus the electrochemical performance. The irreversibility revealed by in situ TEM is further correlated with the half cell measurement, which can well explain the capacity loss in the first cycle.