The dynamics and the reactivity of the plasma produced during pulsed laser ablation of LiNbO3 have been investigated. Optical emission spectroscopy combined with time-gated imaging with high spatial resolution is applied to the study of the factors that influence the plasma expansion process, the dynamics of the ejected species the influence of a background atmosphere (O2 and Ar) and the reactivity of the expanding plasma. Direct evidence for O2 dissociation occurring during expansion is presented and the temporal evolution of the spatial distribution of the dissociated O2 is studied in detail. The influence of dissociation and velocities of the ablated species on the quality of thin films grown by pulsed laser deposition are discussed.