CuFeO2 having delafossite structure was prepared by a solid-state reaction. From Rietveld analysis, the sample synthesized at 1000 degrees C by firing for 48 h under argon was close to ideal CuFeO2, with the refined lattice parameters, a = 3.03333(6) Angstrom and c = 17.1582(4) A for the hexagonal unit cell. The valence state of Fe and Cu were confirmed to be + 3 and 1 +,respectively, from Fe-57 Mossbauer spectra and Cu K-edge XANES spectra, respectively. Lithium intercalation into the structure of delafossite was investigated by using CuFeO2, as cathode material in a Li battery, Li/CuFeO2. When cycled between 1 and 3 V, a discharge capacity of 580 mAh/g was observed with intercalation of 3.25 mol of Li. The working voltage was 1 V. Only 75% of capacity could be recovered on charge. When discharged to lower voltage of 10 mV, a large discharge capacity of 1600 mAh/g was observed, with intercalation of at least 6 mol of Li per formula unit of CuFeO2 without the contribution of acetylene black and it was not possible to charge as only the cycling characteristics of acetylene black was observed due to the decomposition of sample. An attempt has been made to understand the mechanism of lithium intercalation by subjecting the cathode samples to different studies such as XANES spectroscopy, Fe-57 Mossbauer spectroscopy, thermal treatment, etc.