The effect of exfoliation of vapor-grown carbon fiber (VGCF) on the electrochemical properties as an anode of lithium-ion batteries was thoroughly investigated by diverse characterization tools. The exfoliation by the ball milling followed by the acid and heat treatments changed several morphological features such as decreased length, wider interlayer spacing, and even exfoliation of the layer. Moreover, numerous defects including functional groups were observed when the VGCF was exfoliated, increasing the deposition of Fe2O3 on its surface. Owing to these advantages, the exfoliated-VGCF exhibited significantly enhanced C-rate capability with high reversible capacity even though its initial irreversible capacity increased compared to the pristine VGCF. In particular, the Fe2O3/exfoliated-VGCF composite anodes have a good cycle stability with a high capacity of 936 mA h g(-1) after 50th discharge at a C-rate of 100 mA g(-1).