In [19], [24] we introduced a family of self-similar nil Lie algebras \bm L over fields of prime characteristic p > 0 whose properties resemble those of Grigorchuk and Gupta–Sidki groups. The Lie algebra \bm L is generated by two derivations \begin{aligned} v1 &= \partial_1 + t0p − 1(\partial_2 + t_1^{p − 1}(\partial_3 + t_2^{p − 1}(\partial_4 + t_3^{p − 1}(\partial_5 + t_4^{p − 1}(\partial_6 + \cdots ))))), \\ v2 &= \partial_2 + t_1^{p − 1}(\partial_3 + t_2^{p − 1}(\partial_4 + t_3^{p − 1}(\partial_5 + t_4^{p − 1}(\partial_6 + \cdots )))) \end{aligned} of the truncated polynomial ring K[t_i, i \in \mathbb N\ |\ t_i^p = 0,\ i \in \mathbb N] in countably many variables. The associative algebra \bm A generated by v_1,\ v_2 is equipped with a natural \mathbb Z \oplus \mathbb Z -gradation. In this paper we show that for p, which is not representable as p = m^2 + m + 1 , m \in \mathbb Z , the algebra \bm A is graded nil and can be represented as a sum of two locally nilpotent subalgebras. L. Bartholdi [3] and Ya. S. Krylyuk [15] proved that for p = m^2 + m + 1 the algebra \bm A is not graded nil. However, we show that the second family of self-similar Lie algebras introduced in [24] and their associative hulls are always \mathbb Z^p -graded, graded nil, and are sums of two locally nilpotent subalgebras.