Si nanocrystallites embedded in Cu-Al-Fe matrix were developed using arc melting followed by a rapid quenching method which could produce a large scale at one time. Si nanocrystallites of approximately 100nm were dispersed in matrix composed of Al4Cu9 and AlFe phases. To identify the reaction mechanism, the ex situ XRD and HRTEM analyses were employed. Only Si reacted with Li forming a Li15Si4 phase as the final product while the Al4Cu9 and AlFe phases acted as inactive matrix during the first discharge. The Si/Cu-Al-Fe composite showed a good cycle performance with 836 mAh g−1 over 50 cycles. This indicated that inactive matrices not only endured the stress caused by volume expansion of Li-Si alloy but also provided a good electron path as a conductor.