The key challenge to use metallic alloys as anodes in rechargeable lithium batteries is to improve their cycling ability without compromising their high specific capacity. We suggest that an important parameter controlling these two properties is the magnitude of interaction between the active and the inactive components in the alloy system. We demonstrated these ideas on the Al-Cu system by investigating the structure and electrochemical properties of sputtered Al1-xCux (0 < x < 0.37) thin-film alloys. The optimum composition is determined to be similar to 20 at % Cu. A specific capacity of 792 mAh/g has been obtained for nanostructured Al0.8Cu0.2 with capacity retention of similar to 50% after 100 cycles. The formation of a supersaturated solid solution structure is also suggested to enhance the electrochemical performance. (C) 2008 The Electrochemical Society.