We report studies on the vibrational and elastic behavior of lithium oxide, Li2O around its superionic transition temperature. Phonon frequencies calculated using the ab-initio and empirical potential model are in excellent agreement with the reported experimental data. Further, volume dependence of phonon dispersion relation has been calculated, which indicates softening of zone boundary transverse acoustic phonon mode along [110] at volume corresponding to the superionic transition in Li2O. The instability of phonon mode could be a precursor leading to the dynamical disorder of the lithium sub lattice. Empirical potential model calculations have been carried out to deduce the probable direction of lithium diffusion by constructing a super cell consisting of 12000 atoms. The barrier energy for lithium ion diffusion from one lattice site to another at ambient and elevated temperature has been computed. Barrier energy considerations along various symmetry directions indicate that [001] is the most favourable direction for lithium diffusion in the fast ion phase. This result corroborates our observation of dynamical instability in the transverse mode along (110) wave vector. Using molecular dynamics simulations we have studied the temperature variation of elastic constants, which are important to the high-temperature stability of lithium oxide.