A Fe–Si (FeSi2 + Si)/C composite was prepared by mechanical ball milling and investigated as a new inserting anode for use in Li-ion batteries. The composite so prepared has a sandwich structure with the alloy particles as middle cores and the graphite layer as outer shells. The charge-discharge measurements revealed that the Fe–Si/C composite not only had a quite high initial capacity of approximately 680mAhg−1, but also exhibited greatly improved capacity retention with a reversible capacity of approximately 500mAhg−1 after 15 cycles in comparison with pure Si and Fe–Si alloy. Based on XRD, XPS, SEM, Raman and EIS analysis of the composite electrode in different lithiated states, the mechanism for improved cycleability is found to be due to the effective buffering of the volumetric changes of the Fe–Si particles by the graphite shell.