Lithium (Li) is the mainstay mood stabilizer for the treatment of bipolar disorder (BD), although its mode of action is not yet fully understood nor is it effective in every patient. We sought to elucidate the mechanism of action of Li and to identify surrogate outcome markers that can be used to better understand its therapeutic effects in BD patients classified as good (responders) and poor responders (nonresponders) to Li treatment. To accomplish these goals, RNA-sequencing gene expression profiles of lymphoblastoid cell lines (LCLs) were compared between BD Li responders and nonresponders with healthy controls before and after treatment. Several Li-responsive gene coexpression networks were discovered indicating widespread effects of Li on diverse cellular signaling systems including apoptosis and defense response pathways, protein processing and response to endoplasmic reticulum stress. Individual gene markers were also identified, differing in response to Li between BD responders and nonresponders, involved in processes of cell cycle and nucleotide excision repair that may explain part of the heterogeneity in clinical response to treatment. Results further indicated a Li gene expression signature similar to that observed with clonidine treatment, an α2-adrenoceptor agonist. These findings provide a detailed mechanism of Li in LCLs and highlight putative surrogate outcome markers that may permit for advanced treatment decisions to be made and for facilitating recovery in BD patients.