Cadmium ferrite, CdFe₂O₄, is synthesized by urea combustion method followed by calcination at 900°C and characterized by X-ray diffraction (XRD), scanning electron microscopy (SEM), high-resolution transmission electron microscopy (HR–TEM) and selected area electron diffraction (SAED) techniques. The Li-storage and cycling behaviour are examined by galvanostatic cycling, cyclic voltammetry (CV) and impedance spectroscopy in the voltage range, 0.005–3.0 V vs Li at room temperature. CdFe₂O₄ shows a first cycle reversible capacity of 870 (± 10) mAhg^-1 at 0.07C-rate, but the capacity degrades at 4 mAhg^-1 per cycle and retains only 680 (± 10) mAhg^-1 after 50 cycles. Heat-treated electrode of CdFe₂O₄ (300°C; 12 h, Ar) shows a significantly improved cycling performance under the above cycling conditions and a stable capacity of 810 (± 10) mAhg^-1 corresponding to 8.7 moles of Li per mole of CdFe₂O₄ (vs theoretical, 9.0 moles of Li) is maintained up to 60 cycles, with a coulombic efficiency, 96–98%. Rate capability of heat-treated CdFe₂O₄ is also good: reversible capacities of 650 (± 10) and 450 (± 10) mAhg^-1 at 0.5 C and 1.4 C (1 C = 840 mAg^-1) are observed, respectively. The reasons for the improved cycling performance are discussed. From the CV data in 2–15 cycles, the average discharge potential is measured to be ∼ 0.9 V, whereas the charge potential is ∼2.1 V. Based on the galvanostatic and CV data, ex situ-XRD, -TEM and -SAED studies, a reaction mechanism is proposed. The impedance parameters as a function of voltage during the 1st cycle have been evaluated and interpreted.