As a potential multi-electron electrode material for next generation lithium ion batteries, iron fluoride (FeF3) and its analogues are attracting much more attentions. Their microstructures are the key to achieve good electrochemical performances. In this work, FeF3·3H2O nano-flakes precursor with high crystallinity and flower-like morphology is synthesized successfully, by a liquid precipitation method using Fe(NO3)3·9H2O and NH4HF2 as raw materials. The formation and the crystal growth mechanisms of the FeF3·3H2O precursors are investigated and discussed. After different temperature heat-treatment and followed by ball-milling with Super P, the as-prepared FeF3.0·33H2O/C and FeF3/C nanocomposites are used as cathode materials for lithium ion batteries. The FeF3.0·33H2O/C nanocomposite exhibits a noticeable initial specific capacity of 187.1 mAh g−1 and reversible specific capacity of 172.3mAhg−1 at .1C within a potential range of 2.0–4.5V. The capacity retention is as high as 97.33% after 50 cycles. Combined with HRTEM test, it confirms that the hydration water is not harmful but useful, namely, the tunnel phase formed with the hydration water is crucial to unobstructed Li+ diffusion, and therefore leading to excellent electrochemical performances.