Fe2O3 anode suffers from drastic volume change during cycling and poor electronic conductivity, resulting in inferior electrochemical performance. To address these problems, the Fe2O3/nitrogen-doped graphene sheets hybridization strategy is proposed by a hydrothermal/annealing process. In this composite, Fe2O3 nanoparticles are tightly confined in graphene sheets matrix and the porous structure is obtained due to the crumpled and cross-like graphene framework, which can alleviate the volume expansion, maintain integrity of the electrode, and improve electrical conductivity and Li+ diffusion. As a result, benefiting from the synergistic effect of N-doped graphene sheets matrix and Fe2O3 nanoparticles, the composite exhibits a reversible capacity up to 952 mAh g−1 at a current density of 100 mA g−1 and excellent rate capability (348 mAh g−1 at a current density 5000 mA g−1).