Lithium has been intercalated into $FeMoO_4Cl$, and deintercalated from $LixFeMoO_4Cl$ both electrochemically and chemically. The inserted $Li^+$ ions are stabilized in the distorted octahedral field in interlayer space of $FeMoO_4Cl$. The crystal symmetry is reduced from tetragonal to monoclinic due to the reduction of ferric to ferrous ions in $LixFeMoO_4Cl$ upon lithium intercalation. From the magnetic and structural data, it has been concluded that the high-spin electronic configuration of $Fe^{2+}(d_{xz}^2{d_{y2}^1}{d_1}{2d_z^12}{cdot}_y2)$, corresponding to $^5E_g$, group term in $D_{4h}$ symmetry, can be stabilized by the elongation of $FeO_4Cl_{2-}$octahedra in a weak ligand field.