Co3O4 powders as anode active materials for Li-ion battery are synthesized by a simple precipitation method. Physical properties of the prepared Co3O4 are characterized by N2 physisorption, transmission electron microscopy, and X-ray diffraction. Conversion mechanisms upon the structural changes of Co3O4 anode are thoroughly studied by an in situ X-ray absorption fine structure (XAFS) technique. In the first cycle of discharge/charge, the X-ray absorption near-edge structure of Co reveals that the 1.1 V plateau of the discharging is ascribed to the direct conversion of Co3O4 to Co metal, and the 2.0 V plateau of the charging to the conversion of Co metal to CoO and Co3O4. In the second cycle of discharge/charge, the XAFS analysis reveals that a part of Co metal phase remains unconverted due to the phase isolation. It is demonstrated that the addition of a conductive material can significantly improve the redox reaction of the Co3O4 anode material by minimizing the phase isolation.