Failure mechanisms associated with silicon‐based anodes are limiting the implementation of high‐capacity lithium‐ion batteries. Understanding the aging mechanism that deteriorates the anode performance and introducing novel‐architectured composites offer new possibilities for improving the functionality of the electrodes. Here, the characterization of nano‐architectured composite anode composed of active amorphous silicon domains (a‐Si, 20 nm) and crystalline iron disilicide (c‐FeSi2, 5–15 nm) alloyed particles dispersed in a graphite matrix is reported. This unique hierarchical architecture yields long‐term mechanical, structural, and cycling stability. Using advanced electron microscopy techniques, the nanoscale morphology and chemical evolution of the active particles upon lithiation/delithiation are investigated. Due to the volumetric variations of Si during lithiation/delithiation, the morphology of the a‐Si/c‐FeSi2 alloy evolves from a core‐shell to a tree‐branch type structure, wherein the continuous network of the active a‐Si remains intact yielding capacity retention of 70% after 700 cycles. The root cause of electrode polarization, initial capacity fading, and electrode swelling is discussed and has profound implications for the development of stable lithium‐ion batteries.