Carbon encapsulated core-shell Fe@CoFe2O4 nanoparticles (Fe@CoFe2O4@C) are produced by using Kirkendall effect method and used as the anode material for lithium-ion batteries. During the discharge process, Fe and Co particles are synthesized at the shell of the nanoparticles and are pulverized to smaller grains in the low potential regions. These pulverized particles not only increase the contact area between electrolyte and active materials, but also shortens the transfer distance of Li+ and electron, leading to an enhanced capacity. In addition, the structure stability and electrical conductivity of CoFe2O4 (CFO) shell are improved by the thin carbon layer coated on the surface of the shell. Due to this special structure, the Fe@CoFe2O4@C electrode exhibits excellent cycle performance, delivering a capacity of 1911mAhg−1 after 500cycles at 0.3C (1C=1000mAg−1). It also shows superior rate capacities of 760.8, 735.6, 672.2, and 596.5mAhg−1 at the current densities of 1.0, 2.0, 5.0, and 10.0C, respectively.