An anode material with improved electrochemical performances for Li-ion batteries is prepared using the disproportionation reaction of SiO followed by a high energy mechanical milling process. The modified SiO is composed of embedded Si nano-crystallites in a Si-oxide matrix. Si-oxide matrix could be divided into two parts by reactivity with Li-ion. The inactive Si-suboxide matrix would buffer the volume expansion of embedded Si nano-crystallites and active amorphous SiO2 during the lithiation. This modified SiO electrode shows a large reversible capacity, close to 1000 mAh g−1, and good cyclability, over 50 cycles.