Rechargeable lithium‐based batteries generally exhibit gradual capacity losses resulting in decreasing energy and power densities. For negative electrode materials, the capacity losses are largely attributed to the formation of a solid electrolyte interphase layer and volume expansion effects. For positive electrode materials, the capacity losses are, instead, mainly ascribed to structural changes and metal ion dissolution. This review focuses on another, so far largely unrecognized, type of capacity loss stemming from diffusion of lithium atoms or ions as a result of concentration gradients present in the electrode. An incomplete delithiation step is then seen for a negative electrode material while an incomplete lithiation step is obtained for a positive electrode material. Evidence for diffusion‐controlled capacity losses is presented based on published experimental data and results obtained in recent studies focusing on this trapping effect. The implications of the diffusion‐controlled Li‐trapping induced capacity losses, which are discussed using a straightforward diffusion‐based model, are compared with those of other phenomena expected to give capacity losses. Approaches that can be used to identify and circumvent the diffusion‐controlled Li‐trapping problem (e.g., regeneration of cycled batteries) are discussed, in addition to remaining challenges and proposed future research directions within this important research area.