We report the detection of the LiI λ6708 resonance line in the K4V secondary of the black-hole binary Nova Muscae 1991. The LiI feature changes with orbital phase, being stronger (EW ∼ 400 mÅ) around φ = 0.0 (observing the dark side of the secondary) and weaker (EW ≤ 190 mÅ) around φ = 0.5 (observing the side facing the compact object). This effect is interpreted as LiI ionization induced by UV/X-ray illumination of the inner hemisphere of the companion star. From the strength of the LiI feature observed around φ = 0.0 we infer a photospheric lithium abundance of logN(Li) ∼ 3. This value should be considered in fact as a lower limit to the true Li abundance because we have not fully corrected for the LiI overionization expected from UV/X-ray illumination.High lithium abundances are becoming a common feature in the secondaries of black hole binaries. After the Li detections in V404 Cyg, A0620-00 and GS2000 + 25, our observations of Nova Muscae not only add a new case to the list, but also demonstrate the impact of irradiation on the formation of the LiI line for the first time. The LiI features observed in the other black hole binaries are probably also affected by irradiation, although not as strongly as in Nova Muscae, and their Li abundances are higher than previously thought.The most attractive scenario for explaining the origin of the high Li abundances in black hole binaries appears to be nucleosynthesis during the explosive accretion events that characterize these objects. We argue that our LiI detection in the secondary of X-ray Nova Muscae 1991, and the transient γ-ray narrow emission feature at 476 keV observed during the 1991 outburst, are both signatures of Li production around the black hole. We propose that the γ-ray emission line was due to 7Be electron capture which yielded excited 7Li atoms. This reaction is able to account for the central energy, narrow width and time scale of the observed γ-ray emission feature. The presence of Li on the surface of the secondary shows that Li atoms created during the outburst can escape and enrich the interstellar medium.Shrinivas Kulkarni