New electrode material for lithium ion cells using surface and intercalation reactions was found for the alpha-Fe2O3-SnO2 binary system. The solid solution was synthesized by a wet preparation method using a precipitation from alkaline solutions Fe3+ , Sn4+ SO42- containing Fe3+ Sn4+ and SO42-ions. The lithium cells with alpha-(Fe2O3)(0.7)-(SnO2)(0.3) cathode showed the discharge-charge capacity of 300 mA h g(-1). The reaction mechanism was examined by X-ray diffraction (XRD) and the Fe-57 and Sn-119 Mossbauer spectroscopy. Both the intercalation and the surface reactions participate in the charge-discharge process.