The domain formation phenomenon of LiNbO3 crystals was investigated in this study. A stress induced domain formation mechanism was proposed, and domain formation of the as-grown crystals and domain inversion of substrate crystals were explained. The strong piezoelectric effect of LiNbO3 at elevated temperature, could be the direct driving force for inversion of the spontaneous polarization direction and could form domain walls. It was found that the tensile component of the internal stresses can inverse the original direction of the spontaneous polarization.