Two main topics were handled in this study: loss minimization in the irreversible capacity of vapor-grown carbon fibers (VGCFs) by pretreatment techniques and reversible capacity increase in pretreated VGCFs by the deposition of nano-sized Fe2O3. VGCFs were ball-milled and acid-treated, and nano-sized Fe2O3 particles were supported on the pretreated VGCFs. Their performance as anodes in lithium-ion batteries was characterized using a variety of techniques. Compared to the electrode containing pristine VGCF only, electrodes composed of the pretreated-VGCFs enhanced both charge transfer and discharge capacities due to an increase in lithium-ion mobility. Moreover, the Fe2O3 nanoparticles supported on the pretreated VGCFs could eliminate defects and functional groups on the surface of VGCFs generated by the pretreatment, such that the composite of Fe2O3 and pretreated VGCF showed higher reversible capacity at any rate of charge/discharge than the composite of Fe2O3 and the pristine VGCF. Therefore, the Fe2O3/pretreated VGCF composites could be a good candidate for high capacity anodes.