Materials that undergo a conversion reaction with lithium (e.g., metal fluorides MF2: M = Fe, Cu, ...) often accommodate more than one Li atom per transition-metal cation, and are promising candidates for high-capacity cathodes for lithium ion batteries. However, little is known about the mechanisms involved in the conversion process, the origins of the large polarization during electrochemical cycling, and why some materials are reversible (e.g., FeF2) while others are not (e.g., CuF2). In this study, we investigated the conversion reaction of binary metal fluorides, FeF2 and CuF2, using a series of local and bulk probes to better understand the mechanisms underlying their contrasting electrochemical behavior. X-ray pair-distribution-function and magnetization measurements were used to determine changes in short-range ordering, particle size and microstructure, while high-resolution transmission electron microscopy (TEM) and electron energy-loss spectroscopy (EELS) were used to measure the atomic-level structure of individual particles and map the phase distribution in the initial and fully lithiated electrodes. Both FeF2 and CuF2 react with lithium via a direct conversion process with no intercalation step, but there are differences in the conversion process and final phase distribution. During the reaction of Li+ with FeF2, small metallic iron nanoparticles (<5 nm in diameter) nucleate in close proximity to the converted LiF phase, as a result of the low diffusivity of iron. The iron nanoparticles are interconnected and form a bicontinuous network, which provides a pathway for local electron transport through the insulating LiF phase. In addition, the massive interface formed between nanoscale solid phases provides a pathway for ionic transport during the conversion process. These results offer the first experimental evidence explaining the origins of the high lithium reversibility in FeF2. In contrast to FeF2, no continuous Cu network was observed in the lithiated CuF2; rather, the converted Cu segregates to large particles (5–12 nm in diameter) during the first discharge, which may be partially responsible for the lack of reversibility in the CuF2 electrode.