Atomic-level visualization of the intercalation of layered materials, such as metal chalcogenides, is of paramount importance in the development of high-performance batteries. In situ images of the dynamic intercalation of Li ions into MoS2 single-crystal electrodes were acquired for the first time, under potential control, with the use of a technique combining laser confocal microscopy with differential interference microscopy. Intercalation proceeded via a distinct phase separation of lithiated and delithiated regions. The process started at the atomic steps of the first layer beneath the selvedge and progressed in a layer-by-layer fashion. The intercalated regions consisted of Li-ion channels into which the newly inserted Li ions were pushed atom-by-atom. Interlayer diffusion of Li ions was not observed. Deintercalation was also clearly imaged and was found to transpire in a layer-by-layer mode. The intercalation and deintercalation processes were chemically reversible and can be repeated many times within a few atomic layers. Extensive intercalation of Li ions disrupted the atomically flat surface of MoS2 because of the formation of small lithiated domains that peeled off from the surface of the crystal. The current-potential curves of the intercalation and deintercalation processes were independent of the scan rate, thereby suggesting that the rate-determining step was not governed by Butler-Volmer kinetics.