A novel metal-organic framework assembled from Y(iii), Li(i), and terephthalate ligand, formulated as [LiY(BDC)2(H2O)·2(H2O)] (1) (H2BDC = terephthalic acid), has been obtained as single phase under hydrothermal conditions. The crystal structure was solved by single-crystal X-ray diffraction and the bulk was characterized by powder X-ray diffraction (PXRD), thermal analyses (TG-MS and DSC), vibrational spectroscopy (FTIR), scanning/transmission electron microscopy (SEM-EDX, TEM, SAED, and BF-STEM-EDX), and powder X-ray thermodiffractometry (HT-XRD). 1 crystallizes in monoclinic space group (P21/c, with a = 11.6415(7) Å, b = 16.0920(4) Å, c = 13.2243(8) Å and β = 132.23(1)°) and possesses a 3D framework with 1D trigonal channels running along the [101] direction containing water molecules. The structure of 1 is made up of unusual four-membered rings formed by edge- and vertex-shared {YO8} and {LiO4} polyhedra. The four-membered rings are isolated and connected to each other via carboxylate groups. HT-XRD reveals that 1 undergoes phase transformation upon the dehydration process which is a reversible process involving a spontaneous rehydration characterized by fast kinetics. Topological studies were also performed revealing that 1 has a new 2-nodal net.