Abstract: Our efforts in developing nanostructured electrode materials and investigating the transport, storage and and reaction of lithium on the nanoscale level in lithium ion batteries are summarized briefly. With regard to the thermodynamics, there are many defects in small size materials which leads to instability and modification of various properties of the bulk materials. With regard to the kinetics, nanostructured materials possess large cross section reaction areas and short diffusion lengths, which in principle are beneficial for transport and reactions. However, the kinetic advantages of nanostructured materials cannot be exploited due to side reactions on the surfaces and interfaces. Therefore, the development of kinetically stable nanostructured materials should be pursued for practical applications.