Petroleum coke has been heat-treated in the presence of Fe2O3 at 800, 850, and 900 degreesC, and the behavior of the resulting mixture as active electrode material has been evaluated in lithium test cells. X-ray diffraction analysis and scanning electron microscopy revealed that iron oxide was reduced and the carbon texture was modified on heating the carbon/iron oxide mixture. A significant improvement of capacity retention was observed for iron-containing carbon-based electrodes. The changes have been explained by the modification of the carbon surface during annealing with iron oxide, and by the formation of an amorphous protective layer through reduction of iron oxide during the electrochemical reaction with lithium. Electron paramagnetic resonance revealed the participation of iron in reversible redox processes. Impedance spectra showed better stability of the iron-containing carbon-based electrodes. (C) 2004 The Electrochemical Society.