Although graphite is the most widely used negative electrode material in lithium-ion batteries1, its lithium insertion processes and associated dynamics, particularly those of the dilute stages, remain poorly understood. A fundamental understanding of how symmetry-breaking phase transitions occur continuously under operating conditions is lacking. Here, using operando optical microscopy, we provide a unified picture of ion intercalation dynamics during the dilute stages of graphite intercalation, showing that the graphitic particles undergo rapid, localized deintercalation–intercalation step events, leading to deintercalation–intercalation of micrometre-sized regions within seconds. These are reminiscent of a phase-transition phenomenon, ‘avalanches’, which occurs in disordered materials, involving step changes in the order parameter due to jumps between multiple metastable states2,3. Using a modified random field Ising model, the avalanches are related to static disorder, which disrupts intercalation dynamics. The model can also account for the apparently continuous transitions between stages and the experimental avalanche statistics. Finally, we develop a methodology to spatio-temporally analyse the sequences of avalanche events, revealing considerable heterogeneous connectivity. Our work highlights the role of local and static disorder in explaining unexpected phase-transition behaviour and provides new tools and concepts for studying layered battery materials.