Addition of solutes such as lithium enhances ductility of hexagonal-close-packed (hcp) magnesium (Mg). However, the atomistic underpinning of Li addition on individual deformation mechanisms remain unclear and is the focus of the present work. We compared the deformation mechanisms in nanocrystalline (NC) and single crystal simulation systems of pure Mg and Mg-Li hcp alloys. Five deformation modes are observed in the pure NC Mg with randomly oriented grains – one basal {0001} 〈112¯0〉, one pyramidal type-I {101¯1} 〈112¯3〉, and three twinning slip systems {101¯2} 〈101¯1〉,{101¯3} 〈303¯2〉, and {101¯1} 〈101¯2〉. Distributing 10 at.% Li randomly to this NC Mg decreased its compressive yield strength by 14.5%. This also increases the ductility by activating non-basal deformation modes and by reducing the plastic anisotropy. We benchmarked these results by comparing the effect of Li addition on these deformation modes in Mg single crystals. Finally, we present a formability parameter (F_p) model based on unstable stacking fault energy, twin fault energy, and nucleation stress for dislocations (τ_NS). Quantifying the changes in F_p values for the Mg-Li alloys with respect to pure Mg in single crystal simulations explain the decrease in compressive yield strength and change in deformation mechanisms with Li additions. A sensitivity analysis study, comparing our CD-EAM results with a MEAM potential, shows that the effects of Li on the single deformation mechanisms are potential independent. Lastly, while results for Mg-10 at.% Li random alloy are presented here, similar conclusions can be drawn for other compositions of this hcp Mg-Li alloy.