To develop more efficient and safer batteries, a deeper understanding of lithium ion intercalation and de-intercalation dynamics upon operation in lithium-ion batteries is of great importance. We have performed operando high-resolution powder X-ray diffraction (PXRD) studies of the intercalation and de-intercalation process in a graphite electrode material using custom-made capillary-based lithium-ion battery cells. Using high-resolution PXRD, it was possible to resolve the diffraction peaks from a number of lithiated graphite phases occurring during intercalation/de-intercalation of lithium and obtain information about the transformation processes, both related to the staging process and the in-plane transformation. In the staging related to the intercalation of lithium, two-phase and solid-solution behavior is identified. Similar phase behavior is observed when examining the in-plane parameters. The mechanism of intercalation is proposed to involve charge transfer between the lithium ion and the π orbitals of the graphene layer. Broadening of the hk0 peaks may be related to non-uniform reduction of the graphene layers depending on the staging number and the graphene layer neighboring environment.