Magnesium-substituted lithium ferrite powders (Li 1-x Mg 2x Fe 5-x O 8 where x = 0.0-0.8) were prepared by sol-gel auto-combustion method. XRD profiles revealed that all compositions were single cubic ferrite structure for the precursors annealed at 800°C for 2 h. The crystallite size was found to decrease whereas the lattice parameter was increased with increasing Mg 2? ion content. The microstructure of the formed powders was Mg concentration dependent. Increasing the Mg 2? ion ratio was found to inhibit the grain growth of the formed ferrite. The AC electrical conductivity of Mg 2? ion substituted lithium ferrite samples was raised with increasing the concentration of Mg 2? ions as the result of increasing the hopping of electrons between Fe 2? and Fe 3? ions. Meanwhile, dielectric constant (e 0 ) was diminished with increasing the frequency of external electric field as well as increasing the temperature and concentration of Mg 2? ions. Alongside, the formed crystalline magnesium substituted lithium ferrite had good magnetic properties. High saturation magnetization (78.7 emu/g) was attained by the formed ferrite sample at Mg 2? molar ratio of 0.4 annealed at 800°C for 2 h.