Nanocrystalline VO2 having a metastable shear structure, designated as VO2(B), has been synthesized by a simple chemical method. The procedure involves a reduction of aqueous potassium vanadate solution with potassium borohydride around pH 4. The sample has been characterized by x-ray diffraction, differential scanning calorimetry, thermogravimetric analysis, and transmission electron microscopy. The metastable VO2(B) begins to transform irreversibly to the more stable monoclinic rutile VO2 around 350 degrees C and the transformation is complete around 500 degrees C. VO2(B) exhibits a maximum reversible capacity of about 320 mAh/g in the range 4 to 1 V in lithium cells. A good capacity retention on cycling makes it an attractive cathode for rechargeable lithium cells. In addition, the excellent cyclability without any capacity decline around an intermediate 2.5 V range may become particularly useful for the recently suggested aqueous lithium-ion cells consisting of VO2(B) anode and LiMn2O4 cathode.