A silicon nanoparticle–graphite nanosheet composite was prepared via a facile ball milling process for use as the anode for high-rate lithium-ion batteries. The size effect of Si nanoparticles on the structure and on the lithium-ion battery performance of the composite is evaluated. SEM and TEM analyses show a structural alteration of the composites from Si nanoparticle-surrounded graphite nanosheets to Si nanoparticle-embedded graphite nanosheets by decreasing the size of Si nanoparticles from 250 nm to 40 nm. The composites with finer Si nanoparticles provide an effective nanostructure containing encapsulated Si and free space. This structure facilitates the indirect exposure of Si to electrolyte and Si expansion during cycling, which leads to a stable solid–electrolyte interphase and elevated conductivity. An enhanced rate capability was obtained for the 40 nm Si nanoparticle–graphite nanosheet composite, delivering a specific capacity of 276 mAh g−1 at a current density of 1 C after 1000 cycles and a rate capacity of 205 mAh g−1 at 8 C.