Polymer-derived silicon oxycarbide (SiCO) has a reversible capacity of ∼800mAhg−1 and is considered as a promising anode material for Li-ion battery. Further study needs to be conducted in terms of energy and structure in atomic scale, which could be very challenging for current experimental technologies. To better understand the mechanism of lithium insertion in SiCO, first principle calculations are performed to study the atomic structures, bonding mechanism, mechanical properties and lithiation voltage of lithiated SiC1/4O7/4. The predominate feature of the lithiated configuration is the presence of several Li involved tetrahedrons with the formation of LiC/LiO bonds. By the calculations of relative volume and bulk modulus, SiC1/4O7/4 presents a considerably better performance in expansion and mechanical property than Si and SiO1/3. The formation energy and voltage curve also show that the lithium is more preferable in incorporation with SiC1/4O7/4 than Si and SiO1/3, which is attributed to the formation of LiO, LiC bonds and corresponding Li involved tetrahedrons. Our calculations are in agreement with the available experiments, and provide a deeper insight into the lithiation mechanism of SiCO anode for Li-ion batteries.