Hydrothermal activation was used to modify the lithium-insertion properties of graphitized carbon nanotubes. The resulting solids showed a net improvement in their performance as anodes for advanced lithium-ion batteries. The mechanism of the electrochemical reaction with lithium of the modified carbon nanotubes was studied by X-ray diffraction and a combined use of two powerful resonance spectroscopies: solid-state nuclear magnetic resonance and electron paramagnetic resonance. Lithium was first intercalated in the activated multiwalled nanotubes between graphene layers, forming n-stages. Interlayer expansion and misfit between curved layers caused fracture and exfoliation of the nanotubes with an irreversible loss of staging phenomena. The resulting solids displayed an improved capacity retention on successive cycles. The line shape of electron paramagnetic resonance and Knight shifts in nuclear magnetic resonance reveal the electronic changes induced by lithium incorporation-removal in activated nanotubes. These results suppose a new strategy to improve the electrochemical performance of graphitized carbon nanotubes. (c) 2007 The Electrochemical Society.