Fe3O4/Fe/graphene nanocomposite powder is synthesized by electrical wire explosion of Fe wire and dispersed graphene in deionized water at room temperature. The structural and electrochemical characteristics of the powder are characterized by the field-emission scanning electron microscopy, X-ray diffraction, Raman spectroscopy, field-emission transmission electron microscopy, cyclic voltammetry, and galvanometric discharge-charge method. For comparison, Fe3O4/Fe nanocomposites are fabricated under the same conditions. The Fe3O4/Fe nanocomposite particles, around 15-30 nm in size, are highly encapsulated in a graphene matrix. The Fe3O4/Fe/graphene nanocomposite powder exhibits a high initial charge specific capacity of 878 mA/g and a high capacity retention of 91% (798 mA/g) after 50 cycles. The good electrochemical performance of the Fe3O4/Fe/graphene nanocomposite powder is clearly established by comparison of the results with those obtained for Fe3O4/Fe nanocomposite powder and is attributed to alleviation of volume change, good distribution of electrode active materials, and improved electrical conductivity upon the addition of graphene.