A novel composite consisting of nanosized Sn and Si as well as some lithium containing phases was synthesized by a mechanochemical reaction between SiO/SnO and Li using high energy mechanical milling (HEMM) with graphite as a dispersant, followed by a thermal treatment. The electrochemically active nanoclusters of Si and Sn derived by the mechanochemical reduction were uniformly distributed in the elastic matrix of lithium-containing phases and graphite. The difference in the reactive potential of Sn and Si with lithium was favorable for reducing the mechanical stress of the active hosts. Furthermore, the dispersion of Sn among the elastic matrix may contribute to an improved electrical connection among the Si based hosts and the current collectors. As a result, the composite presented a rechargeable capacity of 574.1mAhg−1 after 200 cycles. The capacity fading rate was thus calculated to be less than 0.2% per cycle. The cyclability of the composite was much superior to those of the SnO and SiO electrodes.