Metal fluorides and oxides can store multiple lithium ions through conversion chemistry to enable high-energy -density lithium-ion batteries. However, their practical applications have been hindered by an unusually large voltage hysteresis between charge and discharge voltage profiles and the consequent low-energy efficiency (<80%). The physical origins of such, hysteresis are rarely studied and poorly understood. Here we employ in situ X-ray absorption spectroscopy, transmission electron microscopy, density functional theory calculations, and galvanostatic intermittent titration technique to first correlate the voltage profile of iron fluoride (FeF3), a representative conversion electrode material, With evolution and spatial distribution of intermediate phases in the electrode: The results reveal that, contrary to conventional belief, the phase evolution in the electrode is symmetrical during discharge and charge. However, the spatial evolution of the electrochemically active phases, which is controlled by reaction kinetics, is different. We further propose that the voltage hysteresis in the FeF3 electrode is kinetic in nature. It is the result of ohmic voltage drop, reaction overpotential, and different spatial distributions of electrochemically active phases (i.e., compositional inliomogeneity). Therefore, the large hysteresis Can be expected to be mitigated by rational design and optimization of material microstructure and electrode architecture to improve the energy efficiency of lithium-ion batteries based on conversion chemistry.