This study aims to investigate the influence of substitutionally incorporated Li on sensing performance of nickel oxide films for bolometer applications by comparing Ni1-xO and (LiyNi1-y)(1-x)O films. From the results of structural analysis, it was confirmed that the film deposited from Li0.2Ni0.8O target contained Li which substitutionally occupies the Ni cation site while maintaining a cubic NiO structure. The substitutionally incorporated Li in nickel oxide can serve as an acceptor providing a hole carrier, like as a structural defect. However, in contrast to the structural defect, the substitutional incorporation of Li made it possible to increase the number of hole carriers in nickel oxide film while maintaining excellent film quality. In addition, the contact resistance with electrode was greatly reduced as a result of the substitutionally incorporated Li. These changes in structural and electrical properties lead to a significant reduction of 1/f noise arisen from the (LiyNi1-y)(1-x)O film. As a result, the sensing performance of the (LiyNi1-y)(1-x)O film as evaluated using the (alpha(H)/n)(1/2)/vertical bar beta vertical bar value was nearly 10 times better than that of the Ni1-xO film. Consequently, it can be concluded that the substitutional incorporation of Li can significantly improve the sensing performance of nickel oxide films for bolometer applications.