The reaction of lithium with nanostructured Sn30Co30C40 alloy prepared by mechanical attrition was studied using in situ X-ray diffraction (XRD) and in situ Sn-119 Moumlssbauer effect spectroscopy. During the first discharge (insertion of Li into the alloy) of Li/Sn30Co30C40 cells, similarities between the structures of fully lithiated Sn30Co30C40 and lithiated Sn were observed by XRD. Both XRD patterns showed evidence for the Sn tetrahedra, with neighboring Li atoms, as found in Li22Sn5. This implies that fully lithiated Sn30Co30C40 is composed of nanoscale regions of Li22Sn5, nanoscale Co, and lithiated disordered carbon. In situ Sn-119 Moumlssbauer spectroscopy results were consistent with this interpretation and showed the presence of unlithiated Sn atoms at the bottom of the discharge. This observation agrees well with the fact that attrited Sn30Co30C40 samples only reach about two-thirds of the theoretical capacity. During the first recharge, in situ results from both techniques show that Co is rebonded to the Sn atoms in the CoSn grains as Li is removed. Overall, the insertion of lithium in nanostructured Sn30Co30C40 is believed to proceed via the following reaction where only the fully charged (left) and fully discharged (right) states are indicated: [132(1-z)+40y]Li+Sn30Co30C40 <->(1-z)(6Li(22)Sn(5)+30Co)+zCoSn+40Li(y)C, where y approximate to 0.5.