The Ag-Fe-Sn alloy powders prepared by mechanical alloying technique have been studied as anode material for lithium-ion batteries. The half-cell tests with lithium counter electrode revealed that a suitable substitution of Fe for Ag led to a significant improvement of the cycling performance of the electrodes. Among these electrodes, the Ag36.4Fe15.6Sn48 electrode was found to be capable of keeping a rechargeable capacity of about 280 mAh/g over 300 cycles, which was better than that of the Fe-free Ag52Sn48 electrode. Typically, the structural changes of the Ag26Fe26Sn48 electrode during Li insertion and/or extraction were characterized using the combined techniques involving X-ray diffraction, high resolution transmission electron microscopy, selected area electron diffraction, and energy dispersive X-ray spectrometry. It is considered that the electrochemical properties of these electrodes are associated with their microstructure and morphology, such as the distribution of intermetallic compound Ag3Sn in Sn matrix, the Ag3Sn/Sn ratio as well as the presence of inactive Fe. (C) 2004 The Electrochemical Society.