In this study, a nanorod-like Fe2O3/graphene nanocomposite is synthesized by a facile template-free hydrothermal method and a following calcination in air at 300 °C for 2 h. The Fe2O3 nanorods with diameter of 15–30 nm and length of 120–300 nm are homogenous distributed on both sides of graphene. The morphologies of intermediates at different hydrothermal reaction times are investigated by transmission electron microscopy (TEM) characterization, and a possible growth mechanism of this one-dimensional structure is proposed. It is shown that the α-FeOOH rodlike precursors are formed through a rolling-broken-growth (RBG) model, then the α-FeOOH is transformed into α-Fe2O3 nanorods during calcinations, preserving the same rodlike morphology. Electrochemical characterizations demonstrate that the Fe2O3 nanorod/graphene composites exhibit a very large reversible capacity of 1063.2 mAh/g at the charge/discharge rate of 0.1 C.