Electrolytes are pivotal components of Li-ion batteries. Electrolytes enable ion transport between electrodes. The chemical composition and thermodynamic phase of an electrolyte directly influence performance, safety, and longevity. This chapter discusses challenges and advancements in liquid and solid electrolytes with an accent on their roles in shaping next-generation energy storage systems. Liquid electrolytes, composed of lithium salts dissolved in organic solvents remain the present industry standard, thanks to their desirable ionic conductivity and mature manufacturing infrastructure. Flammability, toxicity, and chemical reactivity under extreme conditions pose risks, such as thermal runaway and fire hazards. In turn, solid electrolytes offer non-flammable alternatives. They exhibit enhanced thermal stability and compatibility with highly energy-dense anodes like lithium metal. Ceramic electrolytes boast promising conductivity and electrochemical stability. Thus far, high production costs and processing challenges hinder the scalability of ceramic alternatives. Polymeric Li-ion electrolytes are flexible and easy to process, yet face limitations, such as relatively low ionic conductivity. Liquid Li-ion electrolytes dominate due to established supply chains and cost-effectiveness. Alternatively, solid electrolytes steadily gain traction amid modern demand for safer and higher-capacity batteries. The synthesis of solid Li-ion electrolytes involves costly processes and requires rare materials. Safety represents a critical driver for solid electrolytes, as they eliminate flammability risks and mitigate lithium dendrite formation. Sustainability and recyclability limitations are common challenges across both electrolyte types. Ionic liquids dissolving lithium salts can be considered to represent the third type of Li-ion electrolyte due to their non-volatility and broad voltage tolerance. Liquid Li-ion electrolytes contribute harshly to environmental pollution due to toxic solvent leakage, whereas solid electrolytes face obvious hurdles in material recovery.