Li-doped MgO is a potential catalyst for the oxidative coupling of methane, whereby surface Li+ O- centers are suggested to be the chemically active species. To elucidate the role of Li in the MgO matrix, two model systems are prepared and their morphological, optical and magnetic properties as a function of Li doping are investigated. The first is an MgO film deposited on Mo(001) and doped with various amounts of Li, whereas the second is a powder sample fabricated by calcination of Li and Mg precursors in an oxygen atmosphere. Scanning tunneling and transmission electron microscopy are performed to characterize the morphology of both samples. At temperatures above 700 K, Li starts segregating towards the surface and forms irregular Li-rich oxide patches. Above 1050 K, Li desorbs from the MgO surface, leaving behind a characteristic defect pattern. Traces of Li also dissolve into the MgO, as concluded from a distinct optical signature that is absent in the pristine oxide. No electron paramagnetic resonance signal that would be compatible with Li+O- centers is detected in the two Li/MgO samples. Density-functional theory calculations are used to determine the thermodynamic stability of various Li-induced defects in the MgO. The calculations clarify the driving forces for Li segregation towards the MgO surface, but also rationalize the absence of Li+O- centers. From the combination of experimental and theoretical results, a detailed picture arises on the role of Li for the MgO properties, which can be used as a starting point to analyze the chemical behavior of the doped oxide in future.