The study of reaction mechanisms in materials for Li-ion batteries mainly involves localization of lighter elements like Li, O, or even H in the structure. Thus, in order to facilitate in situ localization of lighter elements and in situ study of structural evolution in the electrode materials, a circular in situ neutron diffraction cell capable of cycling small amounts of electrode materials (0.2–0.3 g) was developed for primary use at the D20 beamline at ILL, Grenoble, France. The circular cell design was tested using LiFePO₄ and graphite as the model electrode materials. The effect of using deuterated electrolyte versus protonated electrolyte on the quality of the in situ neutron diffraction data was also investigated. First in situ neutron powder diffraction measurements at ILL, Grenoble, were successfully conducted where each neutron diffraction pattern was recorded in only 24 min, delivering very good time resolution. It was also found that a circular cell design holding only a small amount of material soaked in deuterated electrolyte was best to perform quantitative analysis using the Rietveld method over the complete 2 theta range. The pattern shows no apparent anisotropic absorption of the diffracted neutron beams.