Increasing charge capacity and cycling stability of rechargeable Li ion batteries could greatly expand their potential applications, especially in transportation and as storage device for intermittent power sources. Compared to the graphite anodes currently in use, Si has much higher theoretical gravimetric and volumetric charge storage capacities (Li_4.4Si ≈ 4,200 mAh/g, 8,500 mAh/mL) and is an attractive candidate for high capacity lithium ion batteries. Because of the high surface to volume ratio, Si nanoparticles offer the potential of fast charge-discharge kinetics. However, sintering and fracturing of Si nanoparticles after cycling degrade the performance rapidly. We have explored stabilizing the Si nanoparticles by functionalizing the particle surface with phenolic hydrocarbon fragments which can be used in a simple solution phase in-situ sol-gel polymerization process to produce a homogeneous dispersion of Si in a Si-C composite after carbonization. The Si-C nanocomposite thus obtained is highly mesoporous (pore volume ≈ 0.7 cm³/g, BET surface area ≈ 300~900 m²/g), and initial results suggest that such composites are much more stable during cycling. The results of physical characterization, electrochemical behavior, and cycling stability of anodes prepared from Si nanoparticles, functionalized Si nanoparticles, and Si-C composite will be compared and reported. The advantages of such preparation will be discussed.