The inorganic–organic hybrid maghemite (γ-Fe2O3)/polypyrrole (PPy) was synthesized and evaluated as cathode-active material for room temperature lithium batteries. The nanometer-sized core–shell structure of the hybrid consisting of the maghemite core with surface modified by PPy was evidenced from the morphological examination. The cathode fabricated with the as-prepared hybrid material delivered an initial discharge capacity of 233mAhg−1 and a reversible capacity of ∼62mAhg−1 after 50 charge–discharge cycles. A much higher performance with an initial discharge capacity of 378mAhg−1 and a reversible capacity of ∼100mAhg−1 was achieved with the cathode based on the segregated active material, which was obtained by subjecting the as-prepared hybrid material to an additional ball-milling process. The study demonstrates the promising lithium insertion characteristics of the nanometer-sized core–shell maghemite/PPy particles prepared under optimized conditions for application in secondary batteries.