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In this report, we present a simple and generic concept involving metal nanoclusters supported on metal oxide nanowires as stable and high capacity anode materials for Li-ion batteries. Specifically, SnO₂ nanowires covered with Sn nanoclusters exhibited an exceptional capacity of >800 mAhg⁻¹ over hundred cycles with a low capacity fading of less than 1% per cycle. Post lithiation analyses after 100 cycles show little morphological degradation of the hybrid nanowires. The observed, enhanced stability with high capacity retention is explained with the following: (a) the spacing between Sn nanoclusters on SnO₂ nanowires allowed the volume expansion during Li alloying and dealloying; (b) high available surface area of Sn nanoclusters for Li alloying and dealloying; and (c) the presence of Sn nanoclusters on SnO₂ allowed reversible reaction between Sn and Li₂O to produce both Sn and SnO phases.