The paper is devoted to the development of lithium-ion battery grade negative electrode active materials with higher reversible capacity than that offered by conventional graphite. The authors report on results of their experiments as related to the electrochemical performance of silicon-based materials for lithium-ion batteries. A commercial grade of spherically shaped natural graphite (FormulaBT™ SLA1025) was modified in a number of different ways with nano-sized silicon. The reversible capacity of SLA1025 modified by 9.2wt% of the nano-sized amorphous silicon was seen to be as high as 590mAhg−1. The irreversible capacity loss with this compound was 20%. Lithium-ion batteries using such material were observed to display sharp capacity decay during prolonged cycling. In contrast, the reversible capacity of another experimental grade, the SLA1025 modified by 7.9wt% of the carbon-coated Si was as high as 604mAhg−1. The irreversible capacity loss with this material was as low as 8.1%. This grade, also, was seen to display much better cycling performance than the baseline natural graphite. A series of full lithium-ion rechargeable cells were developed in the CR2016 coin cell configuration. Higher specific capacity of graphite modified by silicon was observed. This allowed decreasing graphite content in the lithium-ion cells by a factor of 1.6. The resultant lithium-ion batteries after optimization of their composition displayed approximately 20% higher gravimetric and volumetric specific energy densities than lithium-ion battery based on conventional natural graphite.