The structures and properties of high capacity conversion electrodes are key factors as these undergo successive lithium insertion and conversion during an electrochemical process in the rechargeable lithium-ion batteries. The invention of alloying, conversion and displacement reactions seem to be crucial for reversible intercalation/de-intercalation of more than one Li during the metal redox oxidation state to achieve the high capacity with the electrode of modern lithium-ion batteries. Therefore, the exploration of new electrode materials is necessary based on the conversion or displacement concept and their potential applications. In addition, most of the electrode materials were selected on the basis of not only capacity, voltage and volume change of bulk, but it is also important to consider point defects, surface and interface properties, nano-size effects and metal-mixtures theoretically to meet their requirements of practical applications. In this review, we overview the development of recent conversion electrodes for their better performance experimentally and theoretically with key issues, challenges and future directions in this rapidly developing field.