Tin oxide (SnO2) is a promising candidate as an anode for lithium ion batteries because of its high theoretical capacity. However, poor capacity retention caused by large volume changes during cycling, large initial irreversible capacity, and low rate capability frustrate its practical application. We have developed a ternary nanocomposite based on tin indium oxide (SnO2–In2O3) and graphene nanosheet (GNS) synthesized via a facile solvothermal method. The incorporation of In2O3 into SnO2 can improve the electrochemical property of SnO2 and reduce the charge transfer resistance of electrode leading to the enhanced reversible capacity and rate capability. The graphene nanosheet in the composite electrode can accommodate high volume expansion/contraction during cycling resulting in excellent capacity retention. As an anode for lithium ion batteries, the SnO2–In2O3/GNS nanocomposite exhibits a remarkably improved electrochemical performance in terms of lithium storage capacity (962mAhg−1 at 60mAg−1 rate), initial coulombic efficiency (57.2%), cycling stability (60.8% capacity retention after 50 cycles), and rate capability (393.25mAhg−1 at 600mAg−1 rate after 25 cycles) compared to SnO2/GNS and pure SnO2–In2O3 electrode.