Simple mechanochemical reaction of Mo and P elements in an inert atmosphere can lead to formation of crystalline MoP2 nanoparticle clusters consisting of dispersed similar to 10 nm-sized nanoparticles. The MoP2 nanoparticle clusters have quite reversible lithium-ion insertion and extraction, showing the first discharge and charge capacities of 817 and 719 mAh/g (coulombic efficiency of 88%), respectively between 0 and 1.5 V. Moreover, capacity retention after 60 cycles is 93% (669 mAh/g). In situ X-ray absorption spectroscopy, ex situ transmission electron microscopy, and X-ray diffraction results confirm no decomposition of MoP2 to other phases. However, upon increasing the cutoff voltage to 2 V, the capacity remains stable out to 10 cycles, after which it decreases rapidly, suggesting that MoP2 is decomposed to Mo and LinP phases.