Lithium ferrite powder was synthesized by a novel polyol method. The X-ray diffraction results indicate that the synthesized nanocrystalline lithium ferrite have only spinel structure without the presence of other phase impurities. FT-IR data indicates two strong bands observed in spectrum which is well matched with spinel structure. The morphology and particle size of the spinel ferrite powder, as revealed by SEM analysis. It shows that the Li0.5Fe2.5O4 sample contain uniform and homogenous particles. The electrical behavior clearly indicates that the present ferrite have semiconductor like nature. Thermoelectric power measurement also confirms n-type semiconducting nature of lithium ferrite. A room temperature magnetization result shows a ferromagnetic behavior of the lithium ferrite. The present work describes the structural, electrical and magnetic properties of lithium ferrite.