Nb2O5-carbon nanocomposite is synthesized through a facile one-step hydrothermal reaction from sucrose as the carbon source, and studied as an anode material for high-performance lithium ion battery. The structural characterizations reveal that the nanocomposite possesses a core-shell structure with a thin layer of carbon shell homogeneously coated on the Nb2O5 nanocrystals. Such a unique structure enables the composite electrode with a long cycle life by preventing the Nb2O5 from volume change and pulverization during the charge-discharge process. In addition, the carbon shell efficiently improves the rate capability. Even at a current density of 500 mA·g−1, the composite electrode still exhibits a specific capacity of ∼100 mAh·g−1. These results suggest the possibility to utilize the Nb2O5-carbon core-shell composite as a high performance anode material in the practical application of lithium ion battery.