Gamma-phase lithium aluminate (LiAlO₂) is a ceramic powder used in molten carbonate fuel cells (MCFCs) and in other nuclear and ceramic applications. Upon exposure to water vapor and carbon dioxide at 25 °C, we have observed that gamma-LiAlO₂ converts to lithium aluminum carbonate hydroxide hydrate, Li₂Al₄(CO₃)(OH)₁₂·3H₂O(LACHH) and Li₂CO₃. The conversion was observed by X-ray diffraction (XRD) and carbonate analysis. An equation for the conversion is given, and the morphology is determined by scanning electron microscopy. A high-temperature XRD study and thermogravimetric/differential thermal analysis (TGA/DTA) showed that LACHH decomposes at 250 °C. The decomposition products of LACHH and Li₂CO₃ react to form first alpha-LiAlO₂ and then gamma-LiAlO₂ at temperatures of 650 and 1000 °C, respectively.