We report on results of a comprehensive investigation on reaction mechanisms occurring during Li uptake and release of the composite NiFe2O4/CNT. Operando X-ray diffraction (XRD) and X-ray absorption spectroscopy (XAS) data collected simultaneously using one in situ cell allowed thorough elucidation of structural and electronic alterations happening during Li uptake. From the beginning of Li uptake, the Bragg intensity of the spinel reflections decreases which can be explained by reduction of Fe3+ ions and simultaneous movement of the Fe2+ cations from tetrahedral 8a to empty octahedral 16c sites. The reduction of Fe3+ is clearly evidenced by XAS. The occupation of tetrahedral sites by Li+ can be excluded based on results of density functional theory calculations. Increasing the Li content leads to formation of a new crystalline phase resembling a monoxide with a NaCl-like structure. The appearance of the new phase is accompanied by a steady decrease of the sizes of coherently scattering domains of the spinel and a growth of the domains of the monoxide phase. After uptake of about 2.5 Li per NiFe2O4, all Fe3+ cations are reduced to Fe2+ and the tetrahedral 8a sites are empty (XAS spectra). Careful Rietveld refinements of X-ray powder patterns demonstrate that the tetrahedral 8a site is successively depleted with increasing Li content. Interestingly, the occupancy of the octahedral 16d site is also slightly reduced. Increasing the Li content beyond 2.5 Li/NiFe2O4 leads to successive reduction of the cations to very small metal particles embedded in a Li2O matrix (as evidenced by 7Li MAS NMR investigations). During Li release metallic Ni and Fe are reoxidized to Ni2+ resp. Fe3+. The cycling stability of NiFe2O4/CNT is significantly improved compared to pure NiFe2O4 or a mechanical mixture of NiFe2O4 and CNTs.