Sn–Fe/carbon nanocomposites were synthesized by the mechanochemical treatment of Sn with various amounts of an Fe/C composite through the pyrolysis of Fe(III) acetylacetonate. The composites were then evaluated as alternative anode materials for rechargeable lithium batteries. Based on the obtained ex situ X-ray diffraction (XRD) data, X-ray absorption spectroscopy (XAS) results, and differential capacity plots (DCPs), a reaction mechanism was suggested. It was found that increasing the amounts of the SnFe phase and pyrolyzed carbon in the composite improved its electrochemical characteristics in terms of its capacity retention.