Carbon-encapsulated CoFe2O4/graphene (C@CFO/G) nanocomposite was prepared by a facile hydrothermal strategy and subsequently in situ pyrolysis process. The small-size CoFe2O4 nanoparticles encapsulated within thin carbon shells anchor onto G nanosheets with crumpled and waved structure for C@CFO/G nanocomposite. The as-synthesized nanocomposite delivers high reversible capacity of 925.6mAhg−1 at 100mAg−1 after 50 cycles. It exhibits rate capability of 772.3, 430.6 and 305.3mAhg−1, even at 200, 800 and 1600mAg−1, respectively, indicating outstanding rate capability and cycle stability. The improved electrochemical performance is ascribed to the well-designed structure with carbon shells and two dimension G nanosheets. The C@CFO/G nanocomposite will be an ideal candidate of anode material for lithium ion batteries.