Transition metal sulfides are regarded as another type of high-performance anode materials following the transition metal oxides for lithium ion batteries. However, the lithium storage mechanisms of these sulfides are complicated. This work is intended to evaluate the electrochemical performances of molybdenum disulfide (MoS2) and find out its lithium storage mechanism at different lithium insertion stages. It is found that although the MoS2 shows excellent cycling stability in different voltage ranges, its structural transition is irreversible in the initial cycling. In contrast to the traditional beliefs, metallic Mo is found inert and Li2S/S is the redox couple in a deeply discharged MoS2/Li cell (0.01V vs. Li/Li+). The metallic Mo nanoparticles are believed to be responsible for the enhanced cycling stability of the cell and act as the electronically conducting phase in the capacitive energy storage on the interfaces or grain boundaries of Mo/Li2S x nanocomposite. In addition, the Mo/Li2S nanocomposite can be used as a cathode material for lithium–sulfur batteries.