The threshold displacement energies (TDEs) of lattice atoms in lithium ferrite (LiFe5O8) are calculated using first‐principles molecular dynamics simulations. The TDEs vary with crystal direction and sublattice. The weighted average TDEs are 34.65, 28.54, 38.85, 37.92, and 34.31 eV for FeTetra, FeOct, Li, OI, and OII atoms in LiFe5O8, respectively. The FeOct primary knock‐on atom (PKA) has the smallest TDE. Various defects, including vacancies (VnormalFeTetra, VnormalFeOct, VLi, VnormalOnormalI, and VnormalOII), interstitials (IFe, ILi and IO), antisite defects (LnormaliFnormaleOct, LnormaliFnormaleTetra and FnormaleLi), split interstitials (DFeFe, DLiLi, DLiFe, and DOO), crowding defects (CrowFeFeFe) and exchange defects (OO), are formed by low‐energy recoil events. The effect of the presence of these defects on the magnetic behavior in LFO is investigated using density functional theory. The occupation of the octahedral and tetrahedral sublattice in LiFe5O8 has an important effect on magnetization. The net magnetization decreases or increases when a Fe atom at an octahedral or tetrahedral site is replaced by a nonmagnetic atom, respectively. These results are helpful for using irradiation to tune the magnetic behavior of LiFe5O8 and applying magnetic devices based on LiFe5O8 in the presence of irradiation.