The layered lithium molybdenum oxide, LiMoO2 (R (3) over barm, a = 2.8902 Angstrom and. c = 15.7976 Angstrom) has been synthesized by a novel two-step carbothermal reduction (CTR) method. In the CTR reaction sequence MoO2 is mixed intimately with Li2CO3 and a high surface area carbon and then heated in an inert atmosphere to produce the single-phase LiMoO2. Both the transition metal reduction and lithium incorporation processes are facilitated by the high temperature carbothermal reaction based on the C CO transition. Preliminary electrochemical evaluation of the CTR LiMoO2 in metallic lithium test cells indicates an extraction capacity close to 200 mA h/g-a performance roughly equivalent to the theoretical utilization figure for the LiMoO2 material. The fully de-lithiated material corresponds to formation of a new MoO2 phase. High-resolution measurements reveal a highly structured voltage response characterized by several peaks in the differential capacity data suggesting the presence of multiple phase transitions during the insertion reaction. The Li/LiMoO2 insertion system shows favorable coulombic and energetic reversibility, while the average discharge voltage was determined to be about 2.7 V vs. Li. Based on these results the CTR material is suggested as an electroactive material for lithium ion applications. The carbothermal approach offers a unique and energy efficient method for the commercial synthesis of various compounds in the Li-Mo-O phase diagram.