Incorporation of Lithium in (111)NiO epitaxial layers grown by pulsed layer deposition (PLD) technique on c-sapphire substrates is studied as functions of growth conditions. The effect of Li-inclusion on the structural, morphological, electrical and optical properties of the films have been systematically investigated. It has been found that the concentration of Li in the film is more at lower growth temperatures. However, the crystalline quality deteriorates as the growth temperature is lowered. The investigation suggests that there is a miscibility limit of Li in NiO. Beyond a critical concentration of Lithium, Li-clusters are detected in the films. Further, it has been found that inclusion of Li gives rise to hydrostatic tensile strain in the NiO lattice that results in the reduction of the bandgap. The study also suggests that Li incorporation improves the electrical conductivity of NiO layers. Ni-vacancy defects also play important role in governing the conductivity of these samples.