In lithium-ion cells, there are several different classes of capacity loss, both reversible and irreversible, that limit the cell's exploitable specific capacity and can lead to eventual cell failure. We attempt to clarify what is meant by capacity loss and cyclable lithium loss by defining these terms in the context of electrode state-of-charge restrictions. We define irreversible capacity loss as that associated with active material loss and define two types of reversible capacity loss associated with balanced and unbalanced side reactions. We also examine several methods of compensating for cyclable lithium loss associated with passive-film formation and calculate the effect each has on a cell's specific energy. Preforming the negative electrode, adding cyclable lithium to the positive electrode, and introducing lithium powder into the negative electrode appear to be the most attractive methods in terms of specific energy, but practical constraints such as fabrication cost must be evaluated to determine which is superior. (c) 2005 The Electrochemical Society.