A recently developed technique, electrochemical strain microscopy (ESM), utilizes the strong coupling between ionic current and anisotropic volumetric chemical expansion of lithium-ion electrode materials to dynamically probe the sub-one-hundred? nm interfacial kinetic intercalation properties. A numerical technique based on the finite element method was developed to analyze the underlying physics that govern the ESM signal generation and establish relations to battery performance. The performed analysis demonstrates that the diffusion path within a thin film is tortuous and the extent of lithium diffusion into the electrode is dependent on the SPM-tip-imposed overpotential frequency. The detected surface actuation gives rise to the development of an electromechanical hysteresis loop whose shape is dependent on grain size and overpotential frequency. Shape and tilting angle of the loop are classified into low and high frequency regimes, separated by a transition frequency which is also a function of lithium diffusivity and grain size, f(T) = D/l(2). Research shows that the crystallographic orientation of the surface actuated grain has a significant impact on the shape of the loop. The polycrystalline crystallographic orientation of the grains induces a diffusion path network in the electrode which impacts on the mechanical reliability of the battery. Simulations demonstrate that continuous battery cycling results in a cumulative capacity loss as a result of the hysteric non-reversible lithium intercalation. Furthermore, results suggest that ESM has the capability to infer the local out-of-plane lithium diffusivity and the out-of-plane contribution to Vegard tensor. (C) 2011 The Electrochemical Society. [DOI: 10.1149/1.3619775] All rights reserved.