Because of its stability, nanosized olivine LiFePO4 opens the door toward high-power Li-ion battery technology for large-scale applications as required for plug-in hybrid vehicles. Here, we reveal that the thermodynamics of first-order phase transitions in nanoinsertion materials is distinctly different from bulk materials as demonstrated by the decreasing miscibility gap that appears to be strongly dependent on the overall composition in LiFePO4. In contrast to our common thermodynamic knowledge, that dictates solubility limits to be independent of the overall composition, combined neutron and X-ray diffraction reveals strongly varying solubility limits below particle sizes of 35 nm. A rationale is found based on modeling of the diffuse interface. Size confinement of the lithium concentration gradient, which exists at the phase boundary, competes with the in bulk energetically favorable compositions. Consequently, temperature and size diagrams of nanomaterials require complete reconsideration, being strongly dependent on the overall composition. This is vital knowledge for the future nanoarchitecturing of superior energy storage devices as the performance will heavily depend on the disclosed nanoionic properties.