RuO₂ films can serve as high-performance electrodes for thin film lithium-ion batteries due to their large volumetric charge capacity, low rate sensitivity and excellent cyclability. Unlike other electrode materials, RuO₂ films also do not require high temperature processing, making them suitable for integration with low-power CMOS circuits and for fabrication on flexible membranes. To determine the mechanisms through which Li is reversibly stored in RuO₂ films, detailed characterization studies of sputtered thin films were carried out; galvanostatic and potentiostatic intermittent titration and cyclic voltammetry studies were coupled with ex situ selected area electron diffraction, X-ray photoelectron and Raman spectroscopy, optical and scanning electron microscopy, energy-dispersive X-ray spectroscopy and in situ electrochemical impedance spectroscopy. During lithiation, amorphous RuO₂ is transformed to amorphous Li_xRuO₂ through an alloying reaction and this is followed by a reversible side reaction to form an SEI layer. Li_xRuO₂ then undergoes a conversion reaction to form a mixture of nanosized Ru and Li₂O crystals, and finally at low voltages Li is inserted into the Ru/Li₂O mixture. These reactions occur in a different sequence during delithiation and a large overpotential is required to reverse the conversion reaction, leading to a large energy loss during cycling. It is argued that this hysteretic behavior is associated with slow diffusive processes required for the conversion reactions. The methodology developed in this study can also be applied to other candidate thin film electrode materials and learnings from studies of thin films can be applied to more complex powder-based electrodes used in bulk batteries.