Nanoparticle electrodes in lithium-ion batteries have both near-surface and interior contributions to their redox capacity, each with distinct rate capabilities. Using combined electron microscopy, synchrotron X-ray methods and ab initio calculations, we have investigated the lithiation pathways that occur in NiO electrodes. We find that the near-surface electroactive (Ni2+→Ni0) sites saturated very quickly, and then encounter unexpected difficulty in propagating the phase transition into the electrode (referred to as a "shrinking-core" mode). However, the interior capacity for Ni2+→Ni0 can be accessed efficiently following the nucleation of lithiation "fingers" which propagate into the sample bulk, but only after a certain incubation time. Our microstructural observations of the transition from a slow shrinking-core mode to a faster lithiation finger mode corroborate with synchrotron characterization of large-format batteries, and can be rationalized by stress effects on transport at high-rate discharge. The finite incubation time of the lithiation fingers sets the intrinsic limitation for the rate capability (and thus the power) of NiO for electrochemical energy storage devices. The present work unravels the link between the nanoscale reaction pathways and the C-rate-dependent capacity loss, and provides guidance for the further design of battery materials that favors high C-rate charging.