A series of Sn- coated graphite composite materials for lithium- ion batteries were prepared by microencapsulating nanosize Sn particles in graphite. The nanosize Sn particles are homogeneously dispersed in the graphite matrix via electroless chemical reduction. The tin- graphite composite showed a great improvement in lithium storage capacity. Since Sn is an active element to lithium, Sn can react with lithium to form Li4.4Sn alloys, a reaction accompanied by a dramatic volume increase, whereas the ductile graphite matrix provides a perfect buffer layer to absorb this volume expansion. Therefore, the integrity of the composite electrode is preserved during lithium insertion and extraction. Cyclic voltammetry was employed to identify the reaction process involved in lithium insertion and extraction in the graphite structure, as well as lithium alloying with tin. The tin- graphite composites provide a new type of anode material for lithium- ion batteries with an increased capacity.