The mechanism of the tetragonal to orthorhombic phase separation of Li-intercalated anatase TiO2 has previously been proposed to be a cooperative Jahn-Teller distortion due to occupation of low-lying Ti 3dxz,yz orbitals. 1 Using density functional calculations we show that the orthorhombic distortion of Li0.5TiO2 is not a purely electronic phenomenon, and that intercalated Li plays a critical role. For a 2×1×1 expanded supercell for 0 ≤ x(Li) ≤ 1, the intercalation voltage is minimized for x(Li) = 0.5. The low energy structures display a common structural motif of edge-sharing pairs of LiO6 octahedra, that allows all Li to adopt favourable oxygen coordination. Long-ranged disorder of these sub-units explains the apparent random Li distribution seen in experimental diffraction data.