Lithium substituted magnesium ferrites (LixMg1-xFe2O4, where x = 0.1 to 0.5) were synthesized by solid state reaction method. Various characterization techniques viz. X - Ray Diffraction (XRD), scanning electron microscopy (SEM), vibrating sample magnetometry (VSM) and fourier transform infrared spectroscopy (FTIR) were used to study the effect of lithium substitution. Differences in particle size, crystallinity and magnetic parameters of the ferrites synthesized with difference in composition were observed. XRD patterns of the synthesized samples confirmed phase purity and showed that the lattice parameter decreases with increase in Li content in magnesium ferrite. Decrease in coercivity with increase in lithium concentration was observed from magnetic analysis (VSM). Through FTIR, it was observed that Li+ ions occupy B – sites. FTIR spectrum peaks obtained in the region 1620 – 1670 cm-1 supported water molecule dissociation. It is the required characteristic of the lithium substituted magnesium ferrite to be used in various applications like humidity sensor and hydroelectric cell.