The crystal structure of graphite is characterized by layers. The large separation (3.35Å between layers compared with the C-C bond length of 1.42Å in the layers indicates relatively feeble binding between the atoms of different layers. Up to date, graphite intercalation compounds with many kinds of atoms and molecules have been reported. In this work mechanical alloying (MA) was employed to synthesize graphite-lithium intercalation compounds. By X-ray diffraction, (002) peak of graphite after MA was observed to be located at lower angle than that before MA. The color of the MA sample was found to become gold. These results revealed that Li atoms were intercalated into graphite layers. Neutron diffraction was carried out to get information of the short range structure around a Li atom. The coordination number of the C-Li correlation for the MA sample with nominal LiC2 composition showed the formation of LiC3.1 intercalation compound, the Li concentration of which is much higher than that of stable LiC6 intercalation compound.