The position of magnesium ions in Mg2+-doped lithium ferrite of the composition Li0.5-0.5xMgxFe2.5-0.5xO4, which has been a matter of uncertainty among some experimentalists, is investigated using interatomic potential and ab initio DFT calculations. Among possible 19 defect structure models, some of which have been reported experimentally to be the most favorable, the lowest energy is found for Mg2+ ions evenly replacing Li+ and Fe3+ ion on octahedral sites. This gives a decrease in magnetisation for the Mg2+-doped ferrite relative to the un-doped lithium ferrite. The results suggest that some experimental observations of increased magnetisation of spinel lithium ferrite on Mg2+-doping could be due to substitution of Mg2+ or Li+ on tetrahedral sites at the high temperatures used in preparation of the solid and/or the presence of undetected defects in the initial precursors. (C) 2012 Elsevier Ltd. All rights reserved.