It is well known that all high-capacity Li-alloy anodes for use in Li-ion battery (LIB) applications suffer from significant specific volume changes during Li-ion insertion/extraction. If the microstructure of the electrode materials can be designed properly, the volume change problems encountered during discharge (lithiation) and charge (delithiation) could be alleviated to some extent. We report on a novel route for the encapsulation of Sn nanoparticles (Sn-NPs) within graphene nanostructures via the microwave plasma irradiation of SnO2 for the fabrication of LIB anode materials. Here, the Sn@graphene nanostructure is synthesized in situ into a vertically aligned graphene host that sandwiches the nanostructures between rapid ion and electron transport pathways and demonstrates a structure that is highly suitable for solving the critical volume change problem. Binding of the Sn@graphene on the vertically aligned graphene product exhibits larger-than-theoretical reversible capacities of 1037mAhg−1 even after prolonged cycling, in addition to a Coulombic efficiency in excess of 97%, which reflects the ability of the Sn@graphene nanostructure to prevent the volume change and agglomeration of the Sn-NPs. The cycling ability exceeds 5000 times in half-cells at a 6C rate while retaining 400mAhg−1 reversible capacities (where a 1C rate represents complete charge or discharge after 1h). We successfully increased the charging and discharging rates by nearly 30-fold over the highest rate reported to date while attaining high power and energy densities, which represent the best performance values attained for a long-cycle Sn anode to date. The excellent electrochemical performance observed is mainly attributed to the confined volume change of the Sn within the graphene, ensuring the permanent electrical connectivity of the immobilized Sn@graphene anodes.