Graphene-encapsulated α-Fe2O3 nanorice (GE-FN) has been facilely fabricated via a solution-mixing method at room temperature. The Fe2O3 nanorice with an average of ∼350nm was uniformly wrapped in the graphene sheets. As an anode material for rechargeable lithium batteries, this GE-FN composite exhibits enhanced cyclability and rate performance compared with free α-Fe2O3 nanorice. Even after 500 cycles, it still delivers a capacity over 1000mAhg−1. The morphology of the active materials after the cycling process was also investigated by transmission electron microscopy (TEM), and found that the bare α-Fe2O3 nanorice agglomerated severely, while the α-Fe2O3 nanorice encapsulated by the graphene sheets could keep their pristine morphology well and almost isolate from each other after 500 cycles.