The three primary functional components of a lithium-ion battery are the anode, cathode, and electrolyte. The anode of a conventional lithium-ion cell is made from carbon, the cathode is a metal oxide, and the electrolyte is a lithium salt in an organic solvent.

The most commercially popular anode material is graphite. The cathode is generally one of three materials: a layered oxide (such as lithium cobalt oxide), a polyanion (such as lithium iron phosphate), or a spinel (such as lithium manganese oxide).

The electrolyte is typically a mixture of organic carbonates such as ethylene carbonate or diethyl carbonate containing complexes of lithium ions. These non-aqueous electrolytes generally use non-coordinating anion salts such as lithium hexafluorophosphate (LiPF6), lithium hexafluoroarsenate monohydrate (LiAsF6), lithium perchlorate (LiClO4), lithium tetrafluoroborate (LiBF4), and lithium triflate (LiCF3SO3).

Depending on materials choices, the voltage, capacity, life, and safety of a lithium-ion battery can change dramatically. Recently, novel architectures using nanotechnology have been employed to improve performance.

Pure lithium is very reactive. It reacts vigorously with water to form lithium hydroxide and hydrogen gas. Thus, a non-aqueous electrolyte is typically used, and a sealed container rigidly excludes water from the battery pack.

Lithium ion batteries are more expensive than NiCd batteries but operate over a wider temperature range with higher energy densities, while being smaller and lighter. They are fragile and so need a protective circuit to limit peak voltages.