Dissolution of active material is one of the primary reasons for capacity fade in lithium-ion batteries, particularly at elevated temperatures. The effects of the volume fraction changes due to dissolution in both the active and inert material phases in composite Li-ion electrodes are investigated by a thermal-electrochemical coupled model. The study reveals that the changes in effective transport properties result in a reduction in the electrochemical reaction rate and an increase in the cell resistance, reducing capacity. The simulation results are also used to map the nature of the effects of dissolution of the active particles on the capacity decrease during cycling with different conditions, including temperature and voltage range. (c) 2010 The Electrochemical Society. [DOI: 10.1149/1.3516619] All rights reserved.