Beta-iron oxy-hydroxide, which exhibits a (2 X 2) tunnel-type structure similar to that of alpha-MnO2, was found to intercalate reversibly lithium in the tunnels. This material exhibits a potential slightly higher than 2 V with a capacity of 275 mAh/g and very good cyclic reversibility. X-ray Photoelectron Spectroscopy (XPS) investigation of discharged material showed that iron is reduced to the divalent state, and the lithium incorporated in the tunnels was purely ionic. This explains the good reversibility of this electrode material.