The electrochemical insertion of Li into graphite initiates a series of thermodynamic and kinetic processes. An in-depth understanding of this phenomenon will deepen the knowledge of electrode material design and optimize rechargeable Li batteries. In this context, the phase transition from dense stage II (LiC12) to stage I (LiC6) was comprehensively elucidated in a graphite anode via both experimental characterizations and first-principles calculations. The results indicate that, although the transition from stage II to stage I is thermodynamically allowed, the process is kinetically prohibited because Li ions tend to cluster into stage compounds rather than form a solid solution. Additionally, the phase transitions involve at least three intermediate structures (1T, 2H, and 3R) before reaching the LiC6 (stage I) phase. These findings provide new insights into the electrochemical behavior of graphite and the electrode process kinetics for rechargeable Li batteries.