An easy and effective strategy is developed to produce α-Fe2O3 nanoparticles (NPs) anchored on conducting graphene sheets by a hydrothermal reaction, without any reducing agents. Scanning electron microscopy shows that the α-Fe2O3 NPs are 70–85nm in size and homogeneously anchored on the graphene sheets. As high-performance anodes for lithium-ion batteries, the obtained material exhibits an excellent reversible capacity of ∼1050mAhg−1 based on the total mass. Its cycling performance and rate capability are drastically improved, exhibiting a high charge capacity of 1000±50mAhg−1 with no noticeable capacity fading up to 100 cycles in the voltage range 0.1–3.0V at 50mAg−1. These results highlight the importance of the anchoring of NPs on graphene sheets for maximum use of electrochemically active Fe2O3 NPs and graphene for energy storage applications.