The working of Li-ion batteries is based on the reversible insertion and extraction of Li-ions in the crystal structure of the positive and negative electrode materials resulting in highly efficient and high density energy storage. The nature of the electrode phase transitions induced by the insertion of Li-ions is of large practical importance for Li-ion battery performance. First order phase transitions result in an attractive flat electrode potential, however the phase boundaries formed are associated with poor rate performance and typically lead to poor cycle performance by mechanical failure. However, two of the most studied important electrode materials, olivine LiFePO4 1 and spinel Li4Ti5O12.2 , 3 both displaying a first order phase transition, appear exceptions showing excellent rate performance and a long cycle life. Interestingly, even in equilibrium the fundamental nature of the structural change during the first order phase transition of spinel Li4Ti5O12, is under debate, where it has been proposed to display either a complete solid solution, a phase-separation on the nano-scale or macroscopic phase separation.4-8 Despite the large number of first principle studies9-11 performed, mainly aiming to elucidate the diffusion pathways of Li, few efforts have been made to accurately describe the bulk insertion at finite temperatures from first principles. Here we report an exhaustive Li-vacancy configurational density functional theory (DFT) investigation of Li1+xTi5O12 (0 ≥ x ≥ 9) performed with different Li on 16d arrangements. The results indicate that the configurational interactions allow phase segregation between 8a and 16c occupation on a sub nanometer length scale induced by the partial replacement of Li on the 16d sites. This intimate mixing of the 8a and 16c occupancy structurally appears as a solid solution, however it should be considered as a first order phase transition with a sub nanometer domain size, the existence of which is due to the very small energy associated with the coherent interfaces. Based on our predictions of a sub-nano phase separating system we investigate kinetic properties of these phase boundaries by molecular dynamic simulations. We initialized molecular dynamic calculations in supercells that contain two phases (Li4Ti5O12 and Li7Ti5O12) directly in contact with each other. The results clearly display ultra-fast interface kinetics that rationalizes the excellent rate performance of this material. Calculated activation barriers are in good agreement with NMR relaxation measurement. The interface width between the coexisting phases is basically the distance separating the 16c and 8a atomic positions creating mixed 16c/8a occupation condition very similar to a solid solution description. In retrospect, the current work not only explains the apparent phase separation vs.solid solution contradiction in literature, it also explains the excellent rate performance of this intriguing material. (1) Padhi, A. K.; Nanjundaswamy, K. S.; Goodenough, J. B. Journal of the Electrochemical Society 1997, 144, 1188. (2) Deschanv, A.; Raveau, B.; Sekkal, Z. Mater. Res. Bull. 1971, 6, 699. (3) Colbow, K. M.; Dahn, J. R.; Haering, R. R. J. Power Sources 1989, 26, 397. (4) Wagemaker, M.; Simon, D. R.; Kelder, E. M.; Schoonman, J.; Ringpfeil, C.; Haake, U.; Lützenkirchen-Hecht, D.; Frahm, R.; Mulder, F. M. Adv. Mater. 2006, 18, 3169.(5) Wagemaker, M.; van Eck, E. R. H.; Kentgens, A. P. M.; Mulder, F. M. J. Phys. Chem. B 2009, 113, 224.(6) Lu, X.; Zhao, L.; He, X.; Xiao, R.; Gu, L.; Hu, Y.-S.; Li, H.; Wang, Z.; Duan, X.; Chen, L.; Maier, J.; Ikuhara, Y. Adv. Mater. 2012, 24, 3233.(7) Kitta, M.; Akita, T.; Tanaka, S.; Kohyama, M. J. Power Sources 2014, 257, 120.(8) Schmidt, W.; Bottke, P.; Sternad, M.; Gollob, P.; Hennige, V.; Wilkening, M. Chem. Mater. 2015, 27, 1740.(9) Ziebarth, B.; Klinsmann, M.; Eckl, T.; Elsässer, C. Phys. Rev. B 2014, 89, 174301. (10) Chen, Y.; Ouyang, C.; Song, L.; Sun, Z. Electrochim. Acta 2011, 56, 6084. (11) Bhattacharya, J.; van der Ven, A. Phys. Rev. B 2010, 81, 104304.