The theoretically suggested band structure of the novel p-type semiconductor lithium niobite (LiNbO2), the direct coupling of photons to ion motion, and optically induced band structure modifications are investigated by temperature dependent photoluminescence. LiNbO2 has previously been used as a memristor material but is shown here to be useful as a sensor owing to the electrical, optical, and chemical ease of lithium removal and insertion. Despite the high concentration of vacancies present in lithium niobite due to the intentional removal of lithium atoms, strong photoluminescence spectra are observed even at room temperature that experimentally confirm the suggested band structure implying transitions from a flat conduction band to a degenerate valence band. Removal of small amounts of lithium significantly modifies the photoluminescence spectra including additional larger than stoichiometric-band gap features. Sufficient removal of lithium results in the elimination of the photoluminescence response supporting the predicted transition from a direct to indirect band gap semiconductor. In addition, non-thermal coupling between the incident laser and lithium ions is observed and results in modulation of the electrical impedance.