Carbon-coated Sn powders were prepared from the powder mixtures of thermoplastic precursor PVA, SnO2 and MgO. The characterization of composite powders synthesized was carried out by XRD, TG, TEM, SEM and anodic performance measurement. SnO2 was reduced to metallic Sn by heating with PVA, and its particle size in carbon shell was around 30–100nm. MgO existence hindered the agglomeration of molten metallic Sn and made the dispersion of metallic Sn as fine particles possible. They showed high anodic performance in lithium ion batteries; high charge capacity as 500mAhg−1 even after tenth cycle and stable cyclic performance. The spaces left in carbon shell by MgO after its dissolution were supposed to absorb a large volume expansion of Sn metal particle by Li alloying during discharging. When carbon-coated Sn loaded onto graphite flakes, metallic tin contributed to the increase in capacity.