The capacity variation observed with a carbon-coated silicon monoxide (C-SiO) composite electrode has been explained by the microstructural changes evolved during cycling. In an initial few cycles, the Si domain in SiO is lithiated by alloying reaction, during which cracks form in the Si domain due to volume change. An increase in the contact area between Si and electrolyte solution due to the crack formation, and down-sizing of Si particles facilitate the lithiation reaction, such that the Si domain is lithiated to the most lithium-rich Li Si phase (Li15Si4). Due to an increase in the degree of lithiation, the reversible capacity steadily increases. A severe volume change that is accompanied by the full lithiation, however, leads to a serious particle crack and pulverization, and surface film deposition on the newly exposed Si surface. All these features lead to a breakdown of electrically conductive network within the electrode layer. As a result, some Si particles are electrically isolated to cause a loss in the reversible capacity. (C) 2013 Elsevier Ltd. All rights reserved.