Little is known about how evolved hydrogen affects the cycling of Li batteries. Hypotheses include the formation of LiH in the solid-electrolyte interphase (SEI) and dendritic growth of LiH. Here, we discover that LiH formation in Li batteries likely follows a different pathway: Hydrogen evolved during cycling reacts to nucleate and grow LiH within already deposited Li metal, consuming active Li. We provide the evidence that LiH formed in Li batteries electrically isolates active Li from the current collector that degrades battery capacity. We detect the coexistence of Li metal and LiH also on graphite and silicon anodes, showing that LiH forms in most Li battery anode chemistries. Last, we find that LiH has its own SEI layer that is chemically and structurally distinct from the SEI on Li metal. Our results highlight the formation mechanism and chemical origins of LiH, providing critical insight into how to prevent its formation.