Dynamic Stokes' shift measurements using coumarin 153 as the fluorescence probe have been carried out to explore the effect of added electrolyte, lithium chloride (LiCl), on solvation dynamics in the Triton-X-100 (TX-100) micelle and thus to understand the changes in micellar Palisade layer, especially the entrapped water structures in the Palisade layer. At all concentrations of LiCl, the spectral shift correlation function shows biexponential decay. At lower LiCl concentrations, the longer solvation time is seen to decrease, although the shorter solvation time is not affected much. At higher LiCl concentrations, both longer and shorter solvation times increase with electrolyte concentration. The present observations have been rationalized assuming two possible modes of interaction of the Li+ ions in the micellar palisade layer. For LiCl concentrations below about 1.5 M, the Li+ ions appear to bind preferably to the ether groups of surfactant molecules, and the increased micellar hydration with the added salt effectively makes the solvation dynamics faster. At higher LiCl concentrations, available ether binding sites for the Li+ ions seem to get occupied effectively and the excess Li+ ions start remaining in the Palisade layer as strongly hydrated free ions. Because of strong hydration of the Li+ ions, the mobility of the entrapped water molecules in the micellar Palisade layer decreases significantly, causing the solvation dynamics to slow at higher LiCl concentrations. The fluorescence anisotropy results in the present systems are also in support of the above inferences drawn from solvation dynamics results. The present results with LiCl salt are found to be substantially different than those obtained in our earlier study (Kumbhakar et al. J. Phys. Chem. B 2005, 109, 14168) with salts such as NaCl, KCl, and CsCl. These differences are attributed mainly to the binding of the Li+ ions with the surfactant ether groups, which seems to be unlikely for the other alkali cations.