A delicate structure of graphitic carbon-encapsulated α-Fe2O3 nanocomposite is in situ constructed via “Absorption–Catalytic graphitization–Oxidation” strategy, taking use of biomass matter of degreasing cotton as carbon precursor and solution reservoir. With the assistance of the catalytic graphitization effect of iron core, onion-like graphitic carbon (GC) shell is made directly from the biomass at low temperature (650°C). The nanosized α-Fe2O3 particles would effectively mitigate volumetric strain and shorten Li+ transport path during charge/discharge process. The graphitic carbon shells may promote charge transfer and protect active particles from directly exposing to electrolyte to maintain interfacial stability. As a result, the as-prepared α-Fe2O3@GC composite displays an outstanding cycle performance with a reversible capacity of 1070mAhg−1 after 430 cycles at 0.2C, as well as a good rate capability of ∼ 950mAhg−1 after 100 cycles at 1C and ∼ 850mAhg−1 even up to 200 cycles at a 2C rate.