Silicon-carbon nanofibers coaxial sponge, with strong mechanical integrity and improved electronic conductivity, is a promising anode structure to apply into commercial high-capacity lithium ion batteries. We characterized the electrochemical and mechanical behaviors of amorphous silicon-coated carbon nanofibers (a-Si/CNFs) with in situ transmission electron microscopy (TEM). It was found that lithiation of the a-Si coating layer occurred from the surface and the a-Si/CNF interface concurrently, and propagated toward the center of the a-Si layer. Such a process leads to a sandwiched Li(x)Si/Si/Li(x)Si structure, indicating fast Li transport through the a-Si/CNF interface. Nanocracks and sponge-like structures developed in the a-Si layer during the lithiation-delithiation cycles. Lithiation of the a-Si layer sealed in the hollow CNF was also observed, but at a much lower speed than the counterpart of the a-Si layer coated on the CNF surface. An analytical solution of the stress field was formulated based on the continuum theory of finite deformation, explaining the experimental observation of longitudinal crack formation and general mechanical degradation mechanism in a-Si/CNF electrode.