The electrochemical reaction mechanism of ZnO is investigated to understand its Li insertion/extraction behavior using ex situ X-ray diffraction, extended X-ray absorption fine structure, and high-resolution transmission electron microscopy. Based on these analyses, an interesting partial recombination reaction of ZnO is discovered, which demonstrates that Li2O formed during Li insertion is partially reversible. Additionally, we discover that the control of the partial recombination reaction of the metal oxide is very important for improving reversibility in the first cycle, which is a key finding for realization of highly reversible oxide-based electrode materials. In addition, to enhance the electrochemical performance of the ZnO electrode, a nanostructured ZnO/C composite is prepared by a simple high-energy mechanical milling process. This process allows the electrochemical performance of the ZnO electrode to be evaluated as an anode for rechargeable Li-ion batteries. Electrochemical tests show that the nanocomposite electrode exhibits a high initial charge capacity of 682 mAh g−1, fast rate capability of 371 mAh g−1 at 2 C, and excellent cyclability over 200 cycles.